What is PAN?

Also called: Permanent Account Number

A PAN is the ten-character alphanumeric identifier the Income Tax Department issues to every taxpayer in India, and it is required to file a return, open a bank account or make most large transactions.

The Permanent Account Number is issued by the Income Tax Department and never changes — not on marriage, relocation, or a change of employer. The fourth character encodes the holder's type: P for an individual, C for a company, H for a Hindu Undivided Family, F for a firm, T for a trust.

Holding more than one PAN is an offence under section 272B and carries a ₹10,000 penalty, so a duplicate issued by mistake must be surrendered rather than ignored.

Why it matters

Without a PAN you cannot file an income tax return at all, and tax is deducted from your payments at 20% instead of the normal rate under section 206AA.

A worked example

A consultant invoices ₹4,00,000 in a year to a company that must deduct TDS under section 194J, and has not given the company a PAN.

Illustrative figures. Your own numbers will differ — that is what the quote is for.
Invoice value	₹4,00,000
Normal TDS rate under section 194J	10%
TDS if PAN is furnished	₹40,000
Rate under section 206AA where PAN is missing	20%
TDS actually deducted	₹80,000
Extra cash withheld for the year	₹40,000

The ₹40,000 is not lost — it can be recovered as a refund — but only by filing a return, and a return cannot be filed without the PAN that was missing in the first place. In practice the money sits with the department for the better part of a year.

The statutory position

Each figure with the provision it comes from, so it can be checked.
What	Position	Source
Structure	Ten characters: five letters, four digits, one letter	Rule 114, Income-tax Rules 1962
Fourth character	Holder type — P individual, C company, H HUF, F firm, T trust	Rule 114, Income-tax Rules 1962
Penalty for holding more than one PAN	₹10,000	Section 272B, Income-tax Act 1961
TDS rate where PAN is not furnished	20%, or the applicable rate if higher	Section 206AA, Income-tax Act 1961
Consequence of not linking with Aadhaar	PAN becomes inoperative	Section 139AA read with Rule 114AAA

Not to be confused with

These get used interchangeably, including by tools that should know better. They are different things.

TAN

PAN identifies you as a taxpayer. TAN identifies you as someone who deducts tax from other people's payments. A business commonly needs both, and they are not interchangeable on a challan.

Aadhaar

Aadhaar is an identity number issued by UIDAI for the whole population. PAN is a tax identifier issued by the Income Tax Department. They must be linked, but one does not replace the other.

GSTIN

A GSTIN is built on your PAN — characters 3 to 12 of it are your PAN — but it is a separate registration under GST law, issued per state.

Questions people ask

Does a PAN ever change?

No. The number is permanent and survives marriage, relocation, a change of name and a change of employer. What you update is the data attached to it — name, address, date of birth — through a correction application, which keeps the same number.

What happens if I have two PANs?

Holding more than one is an offence under section 272B with a ₹10,000 penalty, and the usual cause is an innocent duplicate application. Surrender the later one in writing to the assessing officer; keep the one your returns and bank records already use.

Can a foreign national get a PAN?

Yes, on Form 49AA rather than Form 49A. It is required for anyone with taxable income in India, and for a foreign director of an Indian company regardless of income.

What does an inoperative PAN mean in practice?

It has not been cancelled, but it behaves as though it were not furnished — TDS is deducted at the higher section 206AA rate, refunds are held, and the return cannot be processed until it is linked with Aadhaar and becomes operative again.

What usually goes wrong

Applying again after a delay instead of tracking the original application, which produces a duplicate PAN and a penalty
Letting the name on PAN differ from the name on the bank account, which is what causes a refund credit to fail
Ignoring the Aadhaar link until a refund is stuck, at which point the return has already been processed against an inoperative PAN
Quoting a personal PAN on business invoices where the entity has its own