by datta Nighut 
It is an alphanumeric number issued by the income tax department, through which a person is identified for the purpose of taxation in India. This system is being made mandatory in almost all the registration processes because it helps the government keep track of a person’s financial dealings.
The more significant the dealing, the larger the tax, and therefore evading the revenue is hard. Hence, in such registration norms, the requirement of a PAN has been mandatorily made to strengthen the system and widen the tax base by considering each and every type of transaction that bears reasonable value. A threshold limit has been authorized by the concerned department relating to air travel agents.
It has been mentioned in the order of fungicides issued by the Director-General of Foreign Trade that the PAN number shall also be indicated in the IEC itself and would not be allotted separately since the IEC shall be identified by the PAN of the entrants. Thus, the person applying for the IECs shall mention the PAN number in the application for IEC itself. In all the above context, it is clear that a PAN number is mandatory if the person is of a specified type. Otherwise, it is not required to be taken separately. There are no specified rules mentioned anywhere, and no act defines this concept. The only direction is provided by these amendment rules. If PAN is not required in the registration norms, the individual is exempted.
1. Introduction to PAN Number
The Permanent Account Number (PAN) was developed as a way to identify all the financial transactions undertaken by an individual or an entity in the country. It is a 10-character, alphanumeric identifier, issued in the form of a laminated card by the Income Tax Department.
The numbering system of PANs is structured in a manner that represents basic information about the holder. This unique identification code was first issued on 12th January 1964, and since then, the use of PAN has been extended to link to various governmental records and personal banking details of individual taxpayers. The use of PAN is compulsory in the eyes of the Income Tax Department.
In recent times, the necessity of PAN has extended to various other transactions, making it an essential document for many institutions. From a small shopkeeper to a big businessman, PAN has become an important instrument in day-to-day life. It is mandatory for an individual, Hindu Undivided Family, company, and firm, any individual who intends to enter into economic or financial transactions where quoting PAN is mandatory, or wants to file Income Tax returns for themselves or for any other individual, to obtain a PAN card before it falls under legal implications.
The government’s main aim is to curb tax evasion and track every sale and purchase transaction that happens in the country. There are two methods – one online and the other offline, when it comes to applying for a PAN card. One can apply online at the cost of a fee of ₹93 or go through the procedure described below.
2. Legal Requirements for PAN Number in Registration
While applying for a vehicle, as well as at the time of sale and purchase of a vehicle, the applicant or the entity must furnish a PAN number as per legal requirements. Providing a PAN has become a necessity today since a PAN card is considered proof of identity for both tax and non-tax purposes. Many law firms are also requiring the PAN of the prospective lessee as part of due diligence. The direction has also legally mandated the requirement of PAN in various situations.
The required related provisions of income tax law, as well as other relevant laws, are produced hereafter: Necessary provisions related herewith are produced as per the Finance Act. Extension to certain documents of the requirement of Permanent Account Number.
Mandatory furnishing of account number in certain documents. Under S. 139A, the following section shall be inserted, namely: CBS to be quoted in all documents and cash memo, etc. Notwithstanding anything contained in this Act, every person being a manufacturer or producer of such class or classes of goods as may be prescribed, or wholesaler of such class or classes of goods as may be prescribed, shall, before commencing the business of manufacture, production, or wholesale, as the case may be, of such goods, which are chargeable to price, at the address mentioned therein.
The requirement for PAN is a statutory requirement. The Indian Income Tax Act makes it necessary for the following entities to obtain either a PAN or Form 60. The PAN has become a mandatory requirement in almost all spheres where either documents or returns are filed.
Therefore, filling and submission of documents for registration without mentioning or citing the PAN or any other suitable proof in Form 60 shall not only disentitle the registration being made but shall also attract the penalties which have been discussed in the preceding section. The PAN number continues to be a legal necessity in many areas, including opening bank accounts, availing tax benefits, and application or registration of business entities, etc.
3. Benefits of Providing PAN Number
In the Indian financial ecosystem, owning a PAN is seen as an essential component of becoming tax compliant. Alongside that, PAN is also mandatory to access opportunities and services provided in the financial sector. PAN makes it possible to confirm distinct identity and acts as a means of identity verification. It is a crucial number in the financial field, but its usage goes beyond regulatory guidelines.
Some of the advantages of obtaining a PAN are that it facilitates monetary transactions, encourages the identification of tax evaders, and makes it easier to apply for a loan or establish a company. PAN is also used to apply for credit or debit cards, to receive rent or salary, and to make investments. Besides that, PAN has a variety of additional advantages: it makes it easy to conduct transactions such as purchasing a car at a dealership, opening a new bank account, and making significant deposits with banks. PAN makes loan processing easier because it exhibits a person’s or business entity’s creditworthiness.
The PAN owner is given benefits under different Indian laws such as the Income Tax Act, the Companies Act, provisions of the SARFAESI Act, and the Prevention of Money Laundering Act, as well as rules of the Reserve Bank of India. When PAN details are provided for transactions, it makes it simpler and less taxing to compute the tax deductions (if eligible) under section 80C of higher-income regulations based on the computation of taxable income.
PAN can be submitted by the individual conducting the transaction, which gives a clear image of that person who is dealing with the transaction. It also provides an overall concept of the different sources of income and the history linked with the PAN card owner. Using PAN during the transaction process can also help you evade legal consequences upheld by the income tax department.
4. Challenges and Concerns Surrounding PAN Number Verification
During the PAN verification process, several issues might arise. For example, an individual’s father’s name or their date of birth might not match their PAN card details. Alternatively, in some cases, the PAN number is operative but not linked to the individual under consideration. Such a number does not exist or it has expired. This can slow down the verification process, as it may take time to update the reconciliation on a check-back. Additionally, the government must provide updated and valid information.
The failure to do so could result in an individual having a current and valid PAN number despite being listed as a full suspect in another event of misuse owing to the lack of reconciliation at a common point in time. Internationally, over 680 million PAN cards are said to be in use, but the number of mobile phone users in India is exponentially higher. This indicates that despite a rising number of fraudulent PAN cards, many users are facing the risk of identity theft.
From a privacy standpoint, the PAN card holds data that is better to keep for a person. For starters, when extended or copied, the PAN card allows linking the person’s various financial transactions to the original person. Not only does performing PAN number verification frequently lead to the unintentional disclosure of your identity, but it can also eventually cause identity theft.
To avoid these issues, the PAN assertion system, providing a privacy-enhancing solution, is suggested. Other secure verification tools that use biometric authentication technology in addition to the PAN details and PIN are also available.
This ensures that the holder has access to their biometric records and that an official translator receiving and validating the data can also associate the person’s photo with PAN records. For an improved mechanism, there should ideally be a rule to incorporate the requirements of the PAN system. Such guarantees can be seen as also bringing a degree of positive expectation about the link to a substantial subject’s actual existence.
