What is Permanent Account Number (PAN); Its Formation

PAN stands for Permanent Account Number. PAN consists of ten digit alphanumeric number. Permanent Account Number (PAN) is issued by Income Tax Department. PAN card is in laminated form. Permanent Account Number (PAN) is an electronic system through which all tax related information for a person or company is recorded against a single PAN. Permanent Account Number (PAN) enables the department to link all the transactions of taxpayers with the Income Tax Department. These transactions include tax payment, TDS/TCS, returns of Income and so on. In other words, Permanent Account Number (PAN) acts as an identifier of the taxpayer with the department.

FORMATION OF PAN : Permanent Account Number (PAN) follows a particular format which consists of different steps. Let’s take an example, if Permanent Account Number (PAN) is XXXPG1234Z. Then, the formation of this PAN is as follows:  First three characters i.e. XXX is an alphabetic series running from AAA to ZZZ. Fourth character of Permanent Account Number (PAN) represents the status of PAN holder. In this example P stands for the status of Individual. Moreover, this fourth character symbolizes different categories . Here is the brief explanation for the fourth character of Permanent Account Number (PAN).

• Individual: For individual, “P” is the fourth character of Permanent Account Number (PAN). Individual is any person for e.g. Neha, Rahul etc.
• Firm: “F” represents the status of firm in the PAN card. Firm is an organization which has been made by 2 or more partners for profit based business such as Corporation, LLP or Partnership.
• HUF: HUF stands for Hindu Undivided Family and the fourth character for HUF is “H”. HUF is made up of all living individuals who share a common ancestor, as well as the wives and daughters of those individuals.
• Company: Fourth character in PAN for Company is “C”. Company is a different structure which has a separate legal entity from its owners.

Fifth character represents the first character of PAN holder’s Last Name. Here fifth character is “G” i.e. first character of Goel (PAN holder’s surname’s first character).

Next four characters are sequential number running from 0001 to 9999 and here it is 1234.

And last character is an alphabetic check list i.e. “Z”.

I Hope You Understand the Formation of PAN. In case of any Query , Feel Free to ask your questions.

Submitted by : Megha Gupta | AIR 25 (CS Foundation)