Definition
The full form of PAN in finance is “Permanent Account Number.” In India, it’s a unique ten-character alphanumeric identifier, issued in the form of a laminated card, by the Indian Income Tax Department. This number is vital for financial transactions such as receiving taxable salary or professional fees, sale or purchase of assets, trading of mutual funds, etc.
Key Takeaways
- The full form of PAN is Permanent Account Number. It’s a unique 10-digit alphanumeric identity issued by the Department of Income Tax in India.
- It helps the government in tracking all the monetary transactions of high net worth individuals and thereby prevents tax evasion.
- PAN is mandatory for financial transactions such as receiving taxable salary or professional fees, sale or purchase of assets, trading of mutual funds, etc.
Importance
PAN, or Permanent Account Number, is a critical term in finance widely used in India.
It serves as a unique identification number that the Indian Income Tax Department issues to taxpayers.
The PAN is essential primarily because it links all transactions that attract tax under a single source, making it convenient for the government to keep track of these transactions.
It’s beneficial for both income tax authorities and individuals or entities as it enables authorities to cross-check financial transactions, preventing tax evasion, while at the same time, facilitating individuals and entities in tax payment and communication with tax department.
The PAN is also used as proof of identity and age for many other purposes, including applying for a visa or a loan.
Explanation
PAN, or Permanent Account Number, is a unique alphanumeric identifier issued to all judicial entities identifiable under the Indian Income Tax Act, 1961. Its primary purpose is to track financial transactions that might have a taxable component to prevent tax evasion.
This 10-digit code is issued by the Indian Income Tax Department under the supervision of the Central Board for Direct Taxes (CBDT) and serves as important proof of identification. PAN is used for specific financial transactions such as receiving taxable salary or professional fees, sale or purchase of assets above certain limits, buying mutual funds, and more.
It is also used as proof of identity and age for everything from booking tickets for a film, applying for a passport, purchasing foreign currency, to even opening a new bank account. In addition to its utility for the government in keeping track of monetary transactions, it is a universal identification key that helps to track all financial transactions of high-net worth individuals and thereby curb tax evasion.
Examples of Full Form of PAN
The term “Full Form of PAN” refers to the complete definition of the acronym PAN, which in finance usually stands for “Permanent Account Number.”
In India, PAN is a tax identification number assigned to all tax paying individuals and entities. This unique 10-character code is issued to individuals and entities by India’s Income Tax Department. For example, Mr. Sharma, living in Mumbai, India, must provide his PAN when he files his income tax return, or when he is opening a new bank account.
A business in Delhi, India might need its PAN in order to carry out high-value financial transactions or comply with certain business regulations. They would use it during transactions such as purchasing land, applying for a large business loan, or making larger payments to suppliers.
A foreign investor who wants to invest in Indian securities such as shares, bonds, or mutual funds will require a PAN. This is to track their investments and the earnings that they make in taxes. For example, a person living in the United States, who wants to invest in an Indian company, will require a PAN.
Frequently Asked Questions
What is the Full Form of PAN?
The full form of PAN is Permanent Account Number. It is a 10 digit alphanumeric number issued by the Income Tax Department of India to taxpayers.
What is the importance of PAN?
PAN serves as an identity proof and it is mandatory for financial transactions such as receiving taxable salaries, sale or purchase of assets, trading of mutual funds etc. It is also used to track taxable components of the individual’s financial transactions to curb tax evasion.
Can I apply for PAN online?
Yes, you can apply for PAN online. The application can be made either through the NSDL website or the UTIITSL website.
What are the documents required for PAN application?
Documents that are required for PAN application include proof of identity, proof of address, and proof of date of birth. The exact documents needed may vary depending on the applicant’s status (whether individual, company, partnership etc.).
What happens if I lose my PAN card?
If you lose your PAN card, you can apply for a duplicate PAN card online. However, the PAN number remains the same as it is unique to each individual.
Related Entrepreneurship Terms
- Permanent Account Number
- Income Tax Department
- Taxpayer Identification Number
- Financial Transactions
- Identity Proof
Sources for More Information
- Investopedia – A comprehensive source for finance and investment related terms and tutorials.
- Government of India’s Official Website – Official source for Indian government policies and information.
- ClearTax – Provides information and services related to finance and tax in India.
- Income Tax Department, Government of India – An official source for all income tax related information in India.
