## PAN Card India: Complete Guide to Uses, Application, and Compliance

The Permanent Account Number (PAN) is a 10-character alphanumeric identifier issued by the Income Tax Department under **Section 139A** of the Income Tax Act 1961. It is mandatory for virtually all significant financial transactions in India.

### What Is PAN and Who Must Obtain It? (Section 139A)

**Section 139A(1)** requires every person who:
- Has assessable income exceeding the basic exemption limit, OR
- Carries on any business/profession with total sales/gross receipts exceeding Rs 5 lakh in any year, OR
- Is required to furnish a return of income

to apply for a PAN card.

In practice, PAN is required by any individual, HUF, company, firm, AOP, BOI, or trust that enters into any of the high-value transactions listed in **Rule 114B** of the Income Tax Rules 1962.

### Transactions Where Quoting PAN Is Mandatory (Rule 114B)

Rule 114B lists over 18 categories of transactions where quoting PAN is compulsory. Key ones include:

| Transaction | Threshold |
|---|---|
| Sale/purchase of immovable property | Rs 10 lakh or more |
| Sale/purchase of motor vehicle (excluding two-wheelers) | Any amount |
| Opening a bank account (non-Basic Savings Bank Deposit Account) | Any amount |
| Bank cash deposit in a single day | Rs 50,000 or more |
| Purchase of bank drafts/pay orders/banker cheques in cash | Rs 50,000 or more |
| Time deposit with a banking company | Rs 50,000 or more (or Rs 5 lakh cumulative in a year) |
| Purchase of mutual fund units | Rs 50,000 or more per transaction |
| Purchase of bonds/debentures | Rs 50,000 or more |
| Purchase of RBI bonds | Rs 50,000 or more |
| Purchase of foreign exchange | Rs 50,000 or more |
| Payment of life insurance premium | Rs 50,000 or more in a year |
| Payment to hotels/restaurants in cash | Rs 25,000 or more per bill |
| Payment for travel (air or foreign travel) | Rs 25,000 or more per transaction |
| Purchase of shares of a company | Rs 1 lakh or more |
| Purchase of immovable property by non-individuals | Any amount above Rs 10 lakh |

### Section 206AA — 20% TDS for Inoperative PAN

**Section 206AA** requires the deductor to deduct TDS at the **higher of the prescribed rate or 20%** if the deductee does not furnish a valid PAN. This applies to all TDS provisions in Chapter XVII.

Additionally, under CBDT Circular, PANs not linked with Aadhaar became **inoperative** after 31 May 2024. An inoperative PAN is treated as if no PAN was furnished, triggering Section 206AA consequences: TDS at 20% instead of the normal rate (e.g., 10% on FD interest becomes 20%).

### Section 139AA — Aadhaar-PAN Linking

**Section 139AA** of the Income Tax Act, inserted by Finance Act 2017, makes it mandatory for every person eligible to obtain an Aadhaar number to quote their Aadhaar in the ITR and in applications for PAN. Persons who have been allotted PAN as of 1 July 2017 and are eligible for Aadhaar must link the two.

**Current status:** The deadline for PAN-Aadhaar linking was extended multiple times. As of the latest CBDT notification, unlinked PANs are inoperative. To reactivate an inoperative PAN, link it with Aadhaar by paying a fee (currently Rs 1,000) on the e-filing portal and waiting up to 30 days for reactivation.

### Section 234H — Penalty for Not Linking Aadhaar

**Section 234H**, inserted by Finance Act 2021, levies a fee of **Rs 1,000** for linking PAN with Aadhaar after the due date. This fee must be paid before submitting the Aadhaar-PAN linking request.

### How to Apply for a New PAN Card

**Online (NSDL/Protean or UTIITSL portal):**

1. Visit [onlineservices.nsdl.com](https://onlineservices.nsdl.com) or [www.utiitsl.com](https://www.utiitsl.com)
2. Fill Form 49A (Indian citizens) or Form 49AA (foreign nationals/entities)
3. Upload: photograph, proof of identity (Aadhaar/passport/voter ID), proof of address, and proof of date of birth
4. Pay the fee: Rs 107 (within India) or Rs 1,017 (for foreign address dispatch)
5. Receive PAN within 15 working days (physical card) or almost instantly (e-PAN)

**Instant e-PAN (via Aadhaar-based OTP):**
If you have a mobile number linked with Aadhaar, the Income Tax e-filing portal lets you obtain a free instant e-PAN in PDF form. This is a fully valid PAN for all purposes.

**For companies and firms:**
Use Form 49A. Required documents include Certificate of Incorporation, partnership deed, or registration certificate as applicable.

### Corrections and Changes in PAN

To update details (name, date of birth, address) on an existing PAN, submit a PAN correction application through NSDL/UTIITSL portals using Form for Request for New PAN Card or/and Changes or Correction in PAN Data. The fee is the same as a new application.

**IMPORTANT:** You must have only ONE PAN. Holding two PANs is a punishable offence under **Section 272B**, which levies a penalty of **Rs 10,000**.

### Linking PAN with Bank Accounts and Demat Accounts

For KYC compliance and to avoid higher TDS, ensure your PAN is updated with:
- All bank accounts (SEBI requirement for demat accounts)
- Employer payroll records (for correct Form 16 and TDS)
- Mutual fund folios and trading accounts
- [GST registration](https://www.harunraaj.com/services/gst-registration) (your GSTIN includes your PAN as characters 3-12)

### Section 272B — Penalty for PAN Violations

**Section 272B** of the Income Tax Act levies a penalty of **Rs 10,000** for:
- Failure to apply for PAN when required
- Quoting a false PAN
- Failure to quote PAN in documents where required by Rule 114B
- Failure to quote PAN to the person responsible for deducting TDS
- Having or using more than one PAN

*Consult a qualified CA if your PAN is inoperative or you have compliance gaps. Inoperative PANs affect TDS rates, refund processing, and filing validity.*

## Frequently Asked Questions

### Is PAN mandatory for all individuals in India?

PAN is mandatory for anyone who files an [income tax return](https://www.harunraaj.com/services/itr-filing), enters into specified financial transactions (property purchase above ₹10 lakh, vehicle purchase, bank deposits above ₹50,000, etc.), or has taxable income. Under Section 139A of the Income Tax Act, 1961, any person whose total income exceeds the basic exemption limit must obtain PAN.

### What is the penalty for not quoting PAN in financial transactions?

If PAN is not quoted where required, TDS is deducted at the higher rate of 20% (or the applicable rate, whichever is higher) under Section 206AA. Additionally, Section 272B prescribes a penalty of ₹10,000 for failure to obtain or quote PAN. Banks and financial institutions can refuse to open accounts or process transactions without PAN.

### Can I link Aadhaar with PAN online?

Yes. Linking is done through the e-filing portal (incometax.gov.in) or via SMS to 567678. From 1 July 2023, a fee of ₹1,000 applies for late linking. PAN becomes inoperative if not linked with Aadhaar — meaning it cannot be quoted for financial transactions, TDS is deducted at higher rates, and pending refunds are not processed.

### How do I apply for a PAN card?

Indian citizens apply through NSDL (now Protean) via Form 49A, or through UTIITSL. The fee is ₹107 (including GST) for Indian address delivery. Online application requires Aadhaar-based e-KYC, after which a digital PAN (e-PAN) is issued within minutes. Physical card delivery takes 15–20 working days. NRIs and foreign citizens use Form 49AA.

### What is the difference between PAN and TAN?

PAN (Permanent Account Number) is a 10-character alphanumeric identifier for taxpayers, issued under Section 139A. TAN (Tax Deduction and Collection Account Number) is a 10-character identifier required for entities that deduct or collect tax at source, issued under Section 203A. Every deductor must have a TAN; PAN cannot be used in place of TAN for TDS/TCS purposes.

I'm CA Harun Raaj, Visakhapatnam. If any of this affects you or your business, reach out — I'd be glad to help.

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## See Also

- [Your RSUs Are Not Just Salary: The Two Separate Disclosures Required in AY 2026-27 ITR](https://www.harunraaj.com/blog/schedule-fa-rsu-foreign-assets-itr-2-ay-2026-27)
- [ESOP Tax Deferral for Startup Employees: The 48-Month Mechanism Most Tax Advisors Misexplain](https://www.harunraaj.com/blog/esop-tax-deferral-80-iac-startup-employees)
- [Section 80-IAC Tax Holiday: How Startups Actually Get the IMB Certificate](https://www.harunraaj.com/blog/section-80-iac-imb-certificate-startup-tax-holiday)

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