PAN Card: Uses and Eligibility

What Is a PAN Card?

PAN stands for Permanent Account Number is a 10-digit alphanumeric ID issued by the Income Tax Department of India.

It serves one core purpose - to link every financial transaction you make to a single, unique identity. Thus, through PAN the government can track income, prevent tax evasion and ensure financial accountability for individuals and entities.

Who Is Eligible for a PAN Card?

A PAN card is required for people and entities involved in taxable income, business activities, investments, import/export or certain financial transactions in India.

Those eligible are, Indian citizens with taxable income

• Salaried employees and self-employed professionals
• Business owners and companies
• HUFs, trusts and charitable organisations
• NRIs and foreign nationals with financial activity in India There is no minimum age limit. Parents or guardians can apply for a PAN card for minors.

Which form to use

The four new PAN application forms have been notified under Rule 158 read with Section 262 of the Income Tax Act 2025, replacing the old Form 49A and Form 49AA with effect from April 1, 2026.

• Form 93: Indian citizens and Indian passport holders, including NRIs
• Form 95: OCI holders, US citizens and other foreign nationals
• Form 94: Indian entities
• Form 96: Foreign entities

Indian passport holders including NRIs on H-1B, F-1, or Green Card status who retain Indian citizenship use Form 93. Foreign passport holders including OCI holders, US citizens, Canadian, Australian, and British nationals use Form 95.

Uses of a PAN Card

As per the Central Board of Direct Taxes (CBDT), Ministry of Finance, Government of India, the following uses and transaction thresholds are prescribed under Rule 158 and Rule 159 of the Income Tax Rules 2026, read with Section 262 of the Income Tax Act 2025.

Additional regulatory references include Section 206AA of the Income Tax Act 2025, the RBI Master Direction on KYC 2025, and the RBI Basic Savings Bank Deposit Account Directions 2025. The full text of the Income Tax Rules 2026 is available at incometaxindia.gov.in/income-tax-rule-2026.

1. Filing Income Tax Returns

This is the primary purpose. PAN is the unique identifier that links your income, deductions and tax payments to your profile with the Income Tax Department. Without it, you cannot file a return or claim a refund.

2. Opening and Operating Bank Accounts

Under the RBI Master Direction on KYC 2025, PAN is a standard Officially Valid Document required for opening a full-service savings or current account. However, a Basic Savings Bank Deposit (BSBD) account, available at all banks from April 1, 2026, can be opened without PAN by submitting Form 60 in its place, subject to KYC and AML norms.

Within existing accounts, PAN becomes mandatory once total cash deposits or withdrawals across all accounts aggregate to ₹10 lakh or more in a financial year, or for fixed deposits exceeding ₹50,000 per transaction or aggregating above ₹5 lakh in a financial year.

3. Investing in Stocks and Mutual Funds

PAN is mandatory for opening a demat account, trading on stock exchanges and investing in mutual funds. SEBI requires all investors to be KYC-compliant and PAN is a mandatory part of that process.

4. Buying or Selling Property

As per Rule 159 of the Income Tax Rules 2026, PAN is mandatory for all property transactions including purchase, sale, gift or joint development agreements where the transaction value or stamp duty valuation exceeds ₹20 lakh.

It must be quoted in the sale deed, stamp duty registration, and any related banking transaction. For NRIs and OCI holders, PAN is required on both sides of the transaction, as TDS is deducted by the buyer from the sale consideration at the rate applicable to NRI and OCI sellers. Where a property transaction exceeds ₹45 lakh, any person without a PAN must apply for one before completing the transaction.

5. Taking Loans

Banks and NBFCs require PAN as part of the loan application process, whether it is a home loan, personal loan, or vehicle loan. It is also required for loan against securities above applicable thresholds.

6. Purchasing Insurance

As per Rule 159 of the Income Tax Rules 2026, PAN is mandatory for initiating any account-based relationship with an insurance company, covering all new insurance policies regardless of premium amount. Previously, PAN was required only when annual life insurance premiums exceeded ₹50,000.

7. High-Value Purchases

As per Rule 159 of the Income Tax Rules 2026, PAN is mandatory for the purchase or sale of motor vehicles exceeding ₹5 lakh, including high-end two-wheelers but excluding tractors.

For cash payments at hotels, restaurants, banquet halls, convention centres, or event management companies, PAN is required above ₹1 lakh per transaction. For purchase or sale of goods or services not covered elsewhere, PAN is mandatory above ₹2 lakh per transaction.

8. Foreign Exchange and International Transactions

PAN is mandatory for any transaction under the RBI's Liberalised Remittance Scheme (LRS), which permits Indian residents to remit up to USD 2,50,000 per financial year abroad. It is also required when purchasing foreign currency above ₹50,000 in a single transaction.

9. TDS and TCS Compliance

As per Section 206AA of the Income Tax Act 2025, absence of PAN results in TDS being deducted at a flat 20% rate regardless of any applicable treaty or concessional rate. It also blocks access to DTAA relief, making it particularly critical for NRIs and OCI holders with Indian-source income such as rent, dividends, or capital gains.

10. GST Registration

Every GST registration in India requires a valid PAN. The 15-digit GSTIN is structurally derived from it, with PAN forming characters 3 to 12 of the GSTIN. This applies to freelancers, consultants and small business owners whose turnover crosses the applicable GST registration threshold.

11. Proof of Identity

Under the RBI Master Direction on KYC 2025, PAN is listed as an Officially Valid Document (OVD) for identity verification. It is accepted across banks, government offices, insurance companies, and private institutions, including for transactions that have no direct tax implication.

What Can You Do Without a PAN Card?

For smaller transactions where PAN is not mandatory, you can use Form 60 as a self-declaration if you do not have a PAN card. Form 60 is commonly accepted for,

• Opening a Basic Savings Bank Deposit account
• Small cash transactions below the PAN limit
• Certain rural or agricultural transactions However, Form 60 is only a temporary alternative. If you have regular income, investments, or frequent financial transactions, having a PAN card is important and usually necessary.

PAN for Businesses and Entities

Businesses and organisations also need a PAN card before starting operations in India. This includes companies, LLPs, partnership firms, and trusts. A PAN is required for banking and GST registration, tax filings and TDS compliance, invoices and contracts above specified limits, and regulatory filings with organisations like the Securities and Exchange Board of India (SEBI), Reserve Bank of India and the Ministry of Corporate Affairs. Foreign companies investing in India through FDI or FPI routes must also obtain a PAN as part of their KYC documentation.

PAN 2.0 - The Upgraded QR-Based PAN Card

As per the Cabinet Committee on Economic Affairs (CCEA) approval dated November 25, 2024, and the subsequent CBDT press release (PIB Reference No. 2077608), the Income Tax Department launched the PAN 2.0 Project to re-engineer taxpayer registration services. The upgraded card features a dynamic QR code displaying real-time encrypted data for instant KYC verification at banks and financial institutions.

All PAN and TAN services, previously spread across three portals, will consolidate into a single unified Income Tax Department portal. Existing PAN cards remain valid and all current holders are eligible for the upgrade without reapplying for a new PAN number. A reprint can be requested through the Protean or UTIITSL portal at ₹50. New applicants from April 2026 receive the PAN 2.0 card by default.

PAN and the Annual Information Statement (AIS)

The Annual Information Statement (AIS) shows most financial transactions linked to your PAN, including salary, dividends, mutual fund investments, property purchases, and foreign remittances. This information is available on the Income Tax e-filing portal.

This means the Income Tax Department can already see much of your financial activity before you file your return. If the details in your tax return do not match your AIS, you may receive a notice. Reviewing your AIS before filing taxes is therefore very important.

PAN Card for NRIs and OCI Holders

PAN is required for NRIs and OCI holders when they have financial transactions in India, such as buying property, earning rental income, receiving dividends or capital gains, repatriating funds from an NRO account, or claiming tax refunds.

The application form depends on citizenship:

• Indian passport holders, including NRIs, use Form 93
• OCI holders and foreign passport holders use Form 95
• Under the 2026 rules, OCI holders must also provide a Taxpayer Identification Number (TIN) from their country of residence. Without a PAN, TDS may be deducted at a higher 20% rate, and DTAA tax treaty benefits may not be available. NRIs are generally exempt from Aadhaar-PAN linking requirements.

New PAN Rules from April 2026: What Changed

As per the Income Tax Rules 2026, notified by the CBDT under the Income Tax Act 2025, and confirmed by Protean eGov Technologies in its official applicant guidance:

Until March 31, 2026, applicants could complete a PAN application using only Aadhaar. From April 1, 2026, while Aadhaar continues to serve as valid proof of identity and address, applicants must now separately submit proof of date of birth. Accepted documents include a birth certificate, Class 10 marksheet, passport, voter ID, or driving licence.

Your PAN details, must exactly match your Aadhaar records. Any mismatch may result in application rejection. If PAN is not linked with Aadhaar for eligible residents, it can become inoperative under Rule 162 of the Income Tax Rules 2026. This may result in higher TDS deductions, inability to file returns, and restrictions on financial transactions. NRIs without Aadhaar are exempt from this linking requirement under notified exemption categories.

How to Check If Your PAN Is Active

You can check your PAN status on the Income Tax portal. Go to ‘Verify Your PAN’, enter your PAN, date of birth and mobile number, then verify using OTP. Your PAN status will appear instantly.

Correcting Errors in Your PAN

Mistakes in your name, date of birth, or other details can cause problems with bank KYC, demat accounts, tax refunds, and investments. You can correct PAN details online through the Protean or UTI portals by submitting supporting documents. PAN and Aadhaar details should match exactly for successful verification.

Frequently Asked Questions

Can a minor hold a PAN card?

Yes. A PAN can be applied for on behalf of a minor by a parent or guardian and is useful for investments and bank accounts in the child's name.

Can I use Aadhaar instead of PAN?

For most formal financial and tax transactions, PAN remains mandatory. Aadhaar can substitute PAN in limited scenarios such as filing income tax returns, but cannot replace it for investing, demat accounts, or property transactions.

What happens if I quote a wrong PAN?

Quoting an incorrect PAN may attract a penalty of ₹10,000 under Section 272B of the Income Tax Act.

Do NRIs need a PAN card?

PAN is not mandatory based on NRI status alone. It becomes required when Indian financial activity hits specific thresholds, such as receiving rental income, selling property above ₹20 lakh, or investing in Indian markets.

How long does it take to get a PAN card?

An e-PAN is typically issued within 48 hours for eligible resident applicants. For NRIs, processing takes approximately 15 to 20 working days, provided all documents submitted are accurate. A physical card dispatched internationally can take additional time depending on location.

What is an inoperative PAN and how do I fix it?

If your PAN is not linked with Aadhaar, it may be inoperative. To reactivate, link your PAN with Aadhaar on the Income Tax e-filing portal and pay the applicable late fee. NRIs without Aadhaar are exempt and should file a residential status correction instead.

Which PAN form should an OCI holder use?

Since April 1, 2026, OCI holders must use the new Form 95 to apply for a PAN card. This requires selecting OCI as the citizenship type, providing a mandatory Taxpayer Identification Number from the country of residence, and submitting a valid foreign passport.

What is TCS on LRS and how does it affect me?

TCS at 20% is collected at source on LRS remittances above ₹10 lakh in a financial year. It is not an additional tax, it is advance tax that can be adjusted against your tax liability or claimed as a refund when filing your return. It does, however, temporarily reduce your investable cash.

Do I need a separate PAN for my business?

Yes. A company, LLP, or partnership firm must obtain its own PAN, separate from the individual PANs of its directors or partners. This is required before commencing business and is linked to all GST, TDS, and regulatory filings.

What is PAN 2.0 and do I need to upgrade?

PAN 2.0 is the upgraded QR-code-based PAN card introduced by the Income Tax Department. Upgrading is currently optional for existing holders but is recommended as it enables faster KYC verification. New applicants from April 2026 automatically receive the PAN 2.0 card.