Permanent Account Number (PAN)

What Is PAN?

A Permanent Account Number (PAN) is a 10-character alphanumeric code issued by the Income Tax Department of India under section 262 of the Income-tax Act, 2025 (section 139A of the Income-tax Act, 1961). Every company, LLP, individual, trust, or entity that earns income or carries out financial transactions in India must have a PAN.

For companies, PAN is the foundation of tax identity. Your GST registration, TDS filings, bank account opening, and income tax returns all reference the PAN. Without it, you cannot operate.

PAN Structure

The 10-character PAN follows a fixed pattern: ABCDE1234F

• Characters 1-3 — Alphabetic series (randomly assigned)
• Character 4 — Entity type: C for Company, P for Individual, F for Firm, H for HUF, T for Trust
• Character 5 — First letter of the entity's surname/name
• Characters 6-9 — Sequential 4-digit number (0001 to 9999)
• Character 10 — Alphabetic check digit

A company named Beacon Filing Private Limited might receive a PAN like AABCB1234C — where the 4th character "C" denotes a company and the 5th character "B" is the first letter of "Beacon."

Legal Requirements

• Section 262(1)(a) (section 139A(1) of the Income-tax Act, 1961) — Every person whose total income exceeds the maximum amount not chargeable to income-tax must apply for PAN
• Section 262(1)(b) (section 139A(1A) of the 1961 Act) — Every person carrying on business or profession whose total sales, turnover or gross receipts are or are likely to exceed INR 5 lakhs in a tax year must have PAN
• Section 262(3) (section 139A(5A) of the 1961 Act) — PAN must be quoted in all returns to and correspondence with any income-tax authority, and in all challans
• Section 262(9)(a) — Prescribed transactions in which PAN or Aadhaar must be quoted and authenticated in the documents. The list under the 1961 Act is Rule 114B; the rules under the 2025 Act are those prescribed from time to time
• Section 467 (section 272B of the 1961 Act) — Penalty of INR 10,000 for failure to comply with section 262, and INR 10,000 for each default of quoting a false PAN

Section references above are to the Income-tax Act, 2025, which governs tax year 2026-27 onward. The Income-tax Act, 1961 continues to apply to FY 2025-26 and earlier.

When Is PAN Required?

PAN must be quoted in these transactions:

PAN for Foreign-Owned Indian Companies

When a foreigner or NRI incorporates a company in India, the company gets its own PAN — separate from the individual's PAN. Here is how it works:

• Company PAN at incorporation — When you register a company through the SPICe+ form on the MCA portal, PAN and TAN applications are part of the incorporation form itself. PAN is allotted along with the Certificate of Incorporation.
• Individual PAN for foreign directors — Every director of an Indian company needs an individual PAN. Foreign directors who do not have one must apply using Form 49AA (application for PAN by foreign citizens). This requires an apostilled copy of the passport and address proof from the home country.
• PAN for DIN application — A Director Identification Number (DIN) requires PAN. Some foreign nationals apply for PAN and DIN simultaneously.
• Link to bank account — The company's PAN must be linked to its Indian bank account. Banks verify PAN before opening current accounts.

Form 49A vs Form 49AA

Indian residents (including NRIs with Indian passport) apply on Form 49A. Foreign nationals apply on Form 49AA. The key difference: Form 49AA accepts a foreign passport as identity proof and a foreign address as the communication address. Applications can be submitted to NSDL or UTIITSL (the two authorized PAN service providers).

PAN Application Process for Companies

1. During incorporation — PAN application is embedded in the SPICe+ (INC-32) form. No separate application is needed. PAN is allotted within 2-3 days of incorporation.
2. If PAN was not obtained at incorporation (rare cases) — Apply online on the NSDL TIN website. Fill Form 49A, attach Certificate of Incorporation, MOA, AOA, and board resolution. Fee: INR 107 (for Indian communication address) or INR 1,020 (for foreign communication address).
3. PAN for foreign directors — Apply on Form 49AA via the NSDL portal. Attach apostilled passport copy, address proof (utility bill or bank statement from home country — apostilled), and passport-sized photograph. Processing takes 15-20 working days.

PAN-Aadhaar Linking

Under section 262(5) and (6) of the Income-tax Act, 2025 (section 139AA of the Income-tax Act, 1961), a person eligible to obtain an Aadhaar number must quote it in the PAN application and in the return of income, and otherwise intimate it to the prescribed income-tax authority. This does not apply to:

• Companies (PAN with 4th character "C")
• Foreign nationals without Aadhaar
• NRIs who do not have Aadhaar

However, Indian resident directors must link their individual PANs with Aadhaar. Failure to link makes the individual PAN inoperative — which then affects DIN status and ability to sign company filings.

Penalties

• Not obtaining PAN — INR 10,000 under section 467(1) of the Income-tax Act, 2025 (section 272B of the Income-tax Act, 1961)
• Quoting false PAN — INR 10,000 for each such default under section 467(2)
• Not furnishing PAN to a deductor — Tax is deducted at the higher of the rate in the relevant provision, the rates in force, or 20% (5% for the payments specified there) — section 397(2)(b)(i)(C) of the Income-tax Act, 2025 (section 206AA of the Income-tax Act, 1961). For collections, the higher rate is capped at 20% under section 397(2)(b)(ii). The narrow relief for non-residents in section 397(2)(c) is limited to interest on long-term bonds under section 393(2) (Table, Sl. Nos. 2, 3 and 4) and to any other payment on such conditions as may be prescribed, so the Rule 37BC-style relief that ran on a tax residency certificate and TIN cannot be assumed until the rules under the 2025 Act are notified
• Inoperative PAN (Aadhaar not linked) — TDS at higher rate, no refund processing, inability to file returns

Common Mistakes

• Foreign director not applying for individual PAN — Many foreign directors assume the company's PAN covers them. It does not. Each director needs a personal PAN for DIN, for signing filings, and for claiming credit on personal income from India.
• Using incorrect PAN on TDS returns — If the company's PAN is entered incorrectly in TDS returns filed by clients or vendors, the TDS credit does not appear in the company's Form 168 (formerly Form 26AS). This leads to demand notices from the Income Tax Department.
• Not updating PAN details after name change — If the company name changes (through a special resolution and RoC filing), the PAN card must be updated. Until updated, there is a mismatch between MCA records and IT Department records.
• Duplicate PAN — Some foreign nationals inadvertently apply for PAN twice (once during DIN application, once separately). Holding two PANs is illegal. The duplicate must be surrendered using the PAN Change Request form.
• Form 49A instead of 49AA — Foreign nationals must use Form 49AA. Applications on Form 49A get rejected because the form requires Aadhaar or Indian ID proof.

Practical Example

A French national wants to set up a consulting firm in India. Step one: apply for PAN using Form 49AA — she submits an apostilled French passport and a recent utility bill from Paris. PAN arrives in 15 working days. She then applies for DIN using this PAN. With DIN in hand, she files SPICe+ to incorporate a Private Limited Company — during which the company's PAN is automatically generated. Now both the individual director and the company have separate PANs. The company's PAN goes on the GST registration application, bank account opening form, and all TDS challans.

Related Terms

• TAN — Separate number for TDS obligations
• GST Registration — Requires company PAN
• Income Tax Return — Filed using PAN
• TDS — Higher rate applies without PAN

Need help obtaining PAN for your company or foreign directors? Beacon Filing handles the entire process including apostille coordination.