What is PAN?

Permanent Account Number, more commonly known as PAN, is a specific and unique 10-digit alphanumeric code that is assigned by the Income Tax Department of India to every individual and entity who is registered under the Income Tax Act. This includes any kind of income taxable by the Indian Government, be it salaried individuals, business owners, freelancers, agriculturists, etc. It is a combination of the taxpayer’s identity and has been made mandatory by the Indian Government to facilitate better financial transactions and make it easier to track them.

Importance of PAN Card

PAN acts as a unique identification to the Income Tax department of India for any transaction that is taxed. Having PAN for all transactions improves the efficiency of tax collection by a great extent as all information can be tracked in a single master record. It thus helps in curbing tax evasion and avoidance.

It is also used for a variety of other transactions that may not be taxable but are reported to the government. For example, it is required for opening a bank account, investing in mutual funds, filing tax returns, and most money-related transactions. In the absence of PAN, these transactions can be done, but at a higher rate of tax deduction, usually around 20%.

How to Obtain PAN

An individual or entity can easily apply for a PAN number online through the NSDL website or by visiting the nearest PAN center. In order to apply, the applicant must fill in the relevant form and provide necessary documents like proof of address, age, and identity, along with the requisite fee. Once the documentation and fee are submitted, the PAN is issued within a few days.

In conclusion, PAN is a 10-digit number assigned by the Income Tax Department of India to every individual and entity. It is primarily used for the purpose of improving the efficiency of tax collection by the government. It is also necessary for a variety of transactions and can be easily applied for through the NSDL website or by visiting the nearest PAN center.