The Full Form of ‘PAN’ in Banking is ‘Permanent Account Number’.
Full Form of PAN
The Permanent Account Number (PAN) is a unique alphanumeric identifier issued by the Indian Income Tax Department to each individual, company and other entities that are liable to pay taxes in India. It is used as an identification number for all financial transactions and income tax purposes.
In banking, the PAN is a ten-digit alphanumeric code used to identify individuals and entities that are taxable under the Income Tax Act of 1961. It is issued by the Income Tax Department under Section 139A of the Act. The PAN database is managed by the National Securities Depository Limited (NSDL). The database helps to track financial transactions of taxpayers and provides data for both assessment and enforcement purposes.
The PAN structure consists of a three-letter prefix followed by a four-digit serial number followed by the last three characters which form a check digit. The first letter in the prefix indicates whether it belongs to an individual or entity, while the second letter denotes its status such as salaried, business or professional. The last letter stands for the type of entity or nature of transaction.
For instance, if an individual has an alphanumeric code starting with AAYPA then it means he/she is a salaried person belonging to India having a valid PAN card issued by NSDL. Similarly, if an entity has PFLTA then it means it belongs to an LLP having a valid PAN card issued by NSDL.
The main purpose of introducing this unique identification number was to reduce tax evasion in India and provide transparency in financial transactions made by taxpayers across various banks. This system helps authorities effectively monitor payments made against each PAN card holder through Electronic Clearing Service (ECS). It also helps them detect any fraudulent activities related to money laundering or black money transactions within short time period.
Additionally, banks use this 10-digit code as one of their primary KYC documents for opening new accounts or initiating high-value transactions like NEFT & RTGS transfers, etc… This ensures that all legal obligations imposed on bank customers are fulfilled with utmost care and accuracy thereby reducing chances of fraudulent activities taking place through banking channels.
In conclusion, Permanent Account Number (PAN) plays a vital role in banking operations as well as income tax compliance in India owing to its unique 10-digit alphanumeric format which can be easily tracked and monitored during financial transactions taking place across various banks in India.. By using this system, authorities can easily detect any suspicious activity linked to money laundering or black money while simultaneously providing transparency in taxpayer’s financial information maintained with respective banks from time to time
Queries Covered Related to “PAN”
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