PAN and TAN Explained (2025): Structure, Importance, Aadhaar Link & Online Verification

PAN and TAN Explained (2025): The Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) are vital identifiers under the Income-tax Act, 1961, enabling smooth tax administration in India.
This comprehensive guide explains their meaning, purpose, structure, application process, online verification, and compliance tips — essential for every taxpayer, business, and professional.

1. What Is a PAN?

The Permanent Account Number (PAN) PAN and TAN Explained (2025) is a unique 10-digit alphanumeric identifier issued by the Income Tax Department (ITD) under Section 139A of the Income-tax Act, 1961.
Every taxpayer—individual, company, firm, trust, HUF, or association—must quote PAN in all tax-related communications and financial transactions.

Each PAN follows this format: ABCDE1234F, where:

• First 3 letters: Alphabet series (AAA to ZZZ)
• 4th letter: Status of holder (P = Individual, C = Company, F = Firm, T = Trust, etc.)
• 5th letter: First letter of surname or entity name
• Next 4 digits: Numeric series (0001 to 9999)
• 10th letter: Alphabetic check digit

2. Why PAN Matters

PAN serves as a permanent tax identity, linking all financial activities with the Income Tax Department. It helps in:

• Easy retrieval of income, TDS, and TCS records
• Monitoring high-value transactions
• Simplified filing of returns and refund processing
• Prevention of tax evasion and duplication of identity

3. Who Must Obtain a PAN

As per the Finance Act, 2025, PAN is mandatory for:

• Individuals earning income above the basic exemption limit
• Businesses and professionals with turnover above ₹5 lakh in any year
• Charitable trusts required to file returns
• Persons entering transactions where quoting PAN is compulsory (e.g., property purchase, bank deposits)
• Non-individual residents and entities with annual transactions above ₹2.5 lakh

⚠️ Holding more than one PAN attracts a penalty of ₹10,000 under Section 272B.

4. Transactions Requiring PAN

PAN must be quoted for the following financial transactions:

If you do not possess a PAN, Form 60 must be submitted instead.
Minors can quote their parent’s PAN if they have no taxable income.

5. Applying for PAN — Offline and Online

The Income Tax Department authorises UTIITSL and Protean (formerly NSDL) to process PAN applications.

Applicable Forms:

• Form 49A – for Indian citizens and entities
• Form 49AA – for non-residents or foreign entities

Ways to Apply:

• Visit PAN Service Centres of UTIITSL or Protean
• Apply online via www.utiitsl.com or www.protean-tinpan.com

⚡ Instant e-PAN via Aadhaar

If your Aadhaar is linked to your mobile number, you can get e-PAN instantly:

1. Visit the e-PAN Portal.
2. Enter your Aadhaar number and verify with OTP.
3. Receive your digitally signed PAN within minutes — absolutely free.

6. PAN–Aadhaar Linking

Under Section 139AA, quoting Aadhaar is mandatory in PAN applications and income tax returns.
From 1 October 2024, only valid Aadhaar numbers (not enrolment IDs) are accepted.

Failure to link PAN with Aadhaar may result in:

• Non-processing of refunds
• Higher TDS/TCS deductions under Sections 206AA and 206CC
• Restriction of financial transactions until reactivation

How to Link PAN with Aadhaar:

• SMS: Send UIDPAN <12-digit Aadhaar> <10-digit PAN> to 567678 or 56161
• Online: Use the official Income Tax e-Filing portal
• Offline: Submit the linking form with PAN and Aadhaar copies at a PAN service centre

7. Online Verification of PAN

To verify PAN details and prevent errors, the Department provides an Online PAN Verification Service.

You can:

• Verify individual or bulk PANs (for banks, employers, etc.)
• Check PAN validity and name matching
• Prevent errors in TDS returns or tax records

✅ Visit the official PAN Verification Portal to confirm authenticity.

8. TAN – Tax Deduction and Collection Account Number

Along with PAN, any person responsible for deducting or collecting tax at source (TDS/TCS) must obtain a TAN under Section 203A.

Structure of TAN

A TAN consists of 10 alphanumeric characters (e.g., MUMA12345B):

• First 4 letters – City or office code
• Next 5 digits – Unique number
• Last letter – Check digit

Purpose of TAN

TAN must be quoted in:

• TDS/TCS returns and certificates
• Challans for tax payment (Form ITNS 281)
• Communications with the Income Tax Department

Failure to quote TAN can attract a penalty of ₹10,000 under Section 272BB.

How to Apply for TAN

• Apply using Form 49B on the TAN/TDS page.
• You can also apply at UTIITSL or Protean Centres.
• Correction and duplicate requests are also accepted online.

Forgot TAN? Use the Know Your TAN service to retrieve details by name or PAN instantly.

9. PAN vs TAN – Quick Comparison

10. Key Compliance Tips

✅ Keep your PAN active and linked with Aadhaar
✅ Use correct PAN/TAN details in all returns and TDS filings
✅ Verify PAN/TAN details using the official e-verification tools
✅ Do not possess multiple PANs or TANs — surrender duplicates
✅ Regularly check your PAN/TAN status on the Income Tax portal

Conclusion

PAN and TAN are the backbone of India’s tax infrastructure.
They ensure accuracy, transparency, and compliance across all levels of tax administration.
By applying, linking, and verifying these identifiers through the official Income Tax Department portals, individuals and businesses can simplify their compliance process and avoid penalties under the Income-tax Act, 1961.