Permanent Account Number is basically a method of identifying a taxpayer on the computer system through a unique All-India number so that all information relating to that taxpayer, e.g. taxes paid, refunds issued, outstanding arrears, income disclosed, transactions entered etc. can be linked to him through the computer system.
Old System of identifying Tax Payer
Earlier the assessees of the Income tax Department were identified by their General Index Register (GIR) Number. This was essentially a manual system. The GIR number was unique only within an Assessing Officers Ward / Circle and not throughout the country.
To overcome these shortcomings, Permanent Account Number (old series) was first introduced in 1972 and made statutory u/s 139A of the Act w.e.f. 1st April, 1976. Blocks of Permanent Account Numbers were allotted to each Commissioner Charge by the Board. The Commissioners made the allotment of Permanent Account Numbers to assessees under various Assessing Officers in their charge from within the Block allotted to them. Initially the allotment was made manually.
However, the PAN under old series failed to meet the desired objectives for following reasons :-
- No database was maintained and there was no check to avoid allotment of multiple PANs to a taxpayer;
- The data captured under the computerised system was not structured and was limited to very few parameters – Name, Address, Status and designation of A.O.
- The allotment of PAN was not centralised – an assessee could apply for allotment of PAN in different centres and get a distinct PAN from each centre, due to which all India uniqueness could not be achieved.
- PAN was not permanent as jurisdiction of the assessee was part of the PAN and, therefore, was prone to changes with the change in jurisdiction.
Permanent Account Number under new series
Since a taxpayer can make payment of taxes or have monetary transaction anywhere in India, a unique all India taxpayer identification Number is essential for linking and processing transactions / documents relating to a taxpayer on computers, as also for data matching. Therefore, a new series of Permanent Account Number was devised which took care of the above limitations. Section 139A of the Act was amended w.e.f. 1.7.95 to enable allotment of PAN under new series to persons residing in areas notified by the Board. Applications for allotment of PAN under new series were made mandatory in Delhi, Mumbai and Chennai w.e.f. 1.6.96, and in rest of the country w.e.f. 11.2.98.
What are the objectives of introducing new series of PAN?
PAN was introduced keeping in view the following objectives:-
- to facilitate linking of various documents and information, including payment of taxes, assessment, tax demand, arrears etc. relating to an assessee.
- to facilitate easy retrieval of information.
- to facilitate matching of information relating to investment, raising of loans and other business activities of taxpayers collected through various sources, both internal as well as external, for widening of tax base and detecting and combating tax evasion through non-intrusive means.
Structure of the new series of PAN
The Permanent Account Number under new series is based on following constant permanent parameters of a taxpayer and uses Phonetic Soundex code algorithm to ensure uniqueness
- Full name of the taxpayer;
- Date of birth / Date of Incorporation;
- Gender in case of individuals; and
- Father’s name in case of individuals (including in the cases of married ladies
These five fields are called core fields, without which PAN cannot be allotted.
The PAN under the new series is allotted centrally by a customised application system (IPAN / AIS) for all-India uniqueness. The system automatically generates a 10 character PAN using the information in above five core fields. PAN has the following structure:-
The phonetic PAN (PPAN) is a new concept which helps prevent allotment of more than one PAN to assessees with same / similar names. AIS works out the PPAN based on some important key fields of an assessee using an internal algorithm. At the time of PAN allotment, the PPAN of the assessee is compared with the PPANs of all the assessees to whom PAN has been allotted all over the nation.
If a matching PPAN is detected, a warning is given to the user and a duplicate PPAN report is generated. In such cases, a new PAN can only be allotted if the Assessing Officer chooses to override the duplicate PPAN detection.
A unique PAN can be allotted under this system to 17 crore taxpayers under each
alphabet under each status (i.e. individual, HUF, Firm, Company, Trusts, Body of Individuals, Association of Persons etc.)
Is Permanent Account Number (PAN) linked to income Tax Jurisdiction?
The Permanent Account Number/ Card does not by itself indicate jurisdiction, as jurisdiction gets changed frequently and is not a permanent information. However, in the database each PAN is linked to a 10 digit Assessing Officer code indicating the jurisdiction of the taxpayer. This AO code defines the Chief Commissioner Region, the Commissioner’s Charge, the Joint Commissioner Range, and the place and designation of the Assessing Officer(s).
All individual taxpayers are issued PAN cards with their Permanent Account Number, name, father’s name, date of birth, photograph and signature. All other categories of taxpayers are issued PAN Card without photograph and signature. The photograph and signature of the applicant are scanned stored in the Computer centre. PAN cards are printed and issued from the Computer Centre. Only the permanent details of the persons are printed on the PAN cards.
PAN Cards for Individuals contain :-
- PAN (with built in status of the assessee and check alphabet)
- Full name
- Full name of father
- Date of birth
PAN cards for persons other than individuals contain :-
- PAN (with built in status of the assessee and check alphabet)
- Full Name
- Date of Incorporation
Address is not printed on the PAN Card as the same can change and is not permanent. Names of partners, directors, members of HUF are not printed on the PAN cards as it is not possible to print a large numbers of names on one PAN card. The partners / directors / members can, however, be issued PAN cards in their individual capacity.
Who is required to apply for Permanent Account Number
Under Section 139A(1) of the Income-tax Act, 1961 following categories of persons are expected to apply and obtain Permanent Account Number :-
- Persons who are already assessed or assessable to Income-tax
- Persons who are carrying on any business or profession where total sales / turnover /gross receipts are or is likely to exceed Rs. 5,00,000/- in any previous years
- Any class or classes of persons by whom tax is payable under the Income-tax Act or any
- Tax or duty is payable under any other law for the time being in force including importers and exporters whether any tax is payable by them or not.
The Assessing Officer can also allot Permanent Account Number to any other person by whom tax is payable. Any other person can also apply to the Assessing Officer for allotment of a Permanent Account Number.
Source : internet