Permanent Account Number (PAN) is unique alphanumeric combination issued to all juristic entities identifiable under the Indian Income Tax Act 1961. It is issued by the Indian Income Tax Department under the sponsorship of the Central Board for Direct Taxes (CBDT). It is almost equivalent to a national identification number. It is a must to have a PAN number for all those who file their income tax returns, because from 2005 onwards, it has been made obligatory by the Income Tax Department to quote the PAN on return of income as well as on all correspondence with any income tax authority in the country.
Now, it is also necessary to quote PAN in all documents pertaining to financial transactions notified from time to time by the Central Board of Direct Taxes, such as sale and purchase of immovable property or motor vehicle or payments in cash, of amounts exceeding a certain limit to hotels and restaurants, or in connection with travel to any foreign country. It is also mandatory to mention PAN for obtaining a cellular telephone or telephone connection.
As per the Indian Tax Department presently, it is essential to quote a permanent account number on most types of financial and investment related transactions in India and also on the tax forms while filing taxes in India. You need to provide a permanent account number if you want to open a Demat Account, make stock investment, buy sell stocks/shares or mutual funds, invest in other kinds of financial assets, opening bank account, purchase real estate, get loans, applying for a visa and passport, receiving rental income, get foreign remittance from abroad, etc.