Decoding Permanent Account Number: What do the 10 digits on your PAN Card mean?

A Permanent Account Number (PAN) is a 10-character alphanumeric identifier issued by the Income Tax Department of India to individuals, companies, and other entities. PAN, as a unique identifier, links all our financial transactions together.

The structure of PAN is as follows:

• The first three characters are an alphabetical series from AAA to ZZZ.
• The fourth character represents the type of PAN holder (like an individual, company, etc).
• The fifth character is the first letter of the PAN holder’s last name or entity name.
• The next four characters are a numeric series from 0001 to 9999.
• The last character is an alphabetic check digit.

Types of PAN holders

Different types of PAN holders are assigned specific alphabets for the fourth character of the PAN:

P- Individual

C- Company

H- Hindu Undivided Family

A- Association of Persons (AoP)

B- Body of Individuals (BoI)

G- Government agency

J- Artificial juridical person

L- Local authority

F- Firm

T- Trust

Functions and benefits of PAN

PAN is key to all financial transactions. It is used in filing Income Tax Returns, buying property, making any high-value transaction, and investing in mutual funds or stocks.

It helps the government track financial transactions and prevent the circulation of black money. PAN links all the financial activities of an individual under one identifier. It is also accepted as a valid identity proof across the country and is useful for KYC (Know Your Customer) processes in banks and telecom.

Financial institutions use PAN to verify the credit history of individuals, and it helps in the faster processing of loans and issuing credit cards.

For businesses, PAN is mandatory for conducting financial operations, opening current accounts, and complying with tax obligations.