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PAN stands for Permanent Account Number. It is an essential document as per the Income Tax Act, 1961, which all taxpayers should possess. PAN Number is a tax identity for any individual or business generating income.
A PAN is a unique number assigned by the Income Tax Department to an individual or a company for taxpaying. The PAN has all the tax-related information of the taxpayer in one place. It permits the Income Tax Department to maintain detailed records for all the taxpayer, helps in preventing tax evasion.
The main objective of a PAN is to track and prevent tax evasion. The person or the company that holds a PAN enjoys certain benefits offered by Government and will be liable to pay taxes at only fixed rates by the Government.
A PAN is used for a valid identity proof. Also, it is mandatory to submit a copy of PAN Number while selling or buying vehicles, property, and purchasing gold in large quantities.
Benefits of a PAN Number
The following are the benefits:
The PAN of an individual can be used as a PAN for a sole proprietorship.
To obtain a PAN card, one needs to submit an application to their nearest Tax Information Network facilitation centre (TIN-FC) or the nearest branch of the National Securities Depository Ltd (NSDL) from their PAN Department. The NSDL also accepts PAN card applications online.
The steps are as follows:
The following documents are required while applying for a PAN for a proprietorship firm:
The Income Tax Act, 1961 mandates a PAN Number for all individuals, companies and partnerships. Having a PAN is beneficial to individuals and companies. For a sole proprietorship, it is not mandatory to have a PAN under the proprietorship name; it can use the PAN of the individual responsible for the proprietorship.
A sole proprietorship is directly linked with the owner and he/she is solely responsible for the sole proprietorship and all the liabilities/debts attached to it. The PAN can be used for any number of proprietorship firms he/she owns and the same PAN Card can also be used for registrations such as MSME, GST or IEC. The IT Return can also be filed using the same PAN.
PAN is an essential document as per Income Tax Act, 1961, which all taxpayers should possess. PAN Number is a tax identity for any individual or business generating income. Separate company pan cards for sole proprietors’ are not issued for such firms as they do not have a separate legal existence like a company.
Read our article:What is the Difference between PAN and TAN?
Completed BA LLB from JEMTEC, School of Law, Greater Noida (Affiliated to GGSIP University, New Delhi). I have an experience of about 2 years in various fields of corporate laws, but I have a keen interest in researching on legal issues and to gain knowledge. I always strive to bring the best to work on what I do.
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