Understanding PAN for Businesses: Why Every Corporate Needs It

A PAN (Permanent Account Number) card has become an essential requirement for all businesses operating in India. This unique 10-digit alphanumeric number serves as a key identifier for your company across all financial transactions.

Whether you run a large corporation, a mid-sized organisation or even a small partnership firm, having a valid PAN card carries multiple advantages. Read on to understand why every single business must acquire a PAN number.

What is a Company PAN Card?

A PAN card for businesses is very similar in function to the PAN for individuals. Just like individuals need a PAN for filing taxes, financial transactions, investments and so on, corporate entities need one for essentially the same purposes.

It serves as a unique identifier that links all your company’s financial activities to a single reference point. The Income Tax Department uses your business PAN to track transactions, ensure tax compliance and regulate financial dealings.

Why Every Company Needs a PAN Card

Here are the key reasons why every organisation need a PAN card:

1. Mandatory for tax compliance: First and foremost, having a PAN card for corporates is mandatory for any company that files taxes in India, irrespective of revenue or sector. You have to quote your valid PAN on all tax returns. Non-compliance can attract penalties under Section 272B of the Income Tax Act.

2. Essential for large financial transactions: Your business PAN card facilitates big transactions like business payments, invoices, bills and so on. Certain transactions above 2-5 lakhs require PAN disclosure.

3. Access loans easily: Financial institutions ask for your company’s PAN details before processing any loan application. So, having this document makes the loan application journey easier. 

4. Streamlines operations: From client onboarding to claiming invoice tax credit, GST, vendor payments for goods, machinery, and more, your company's PAN enables seamless financial operations. It is indispensable for daily business functioning.

5. Builds credibility: When you have a PAN card, your business demonstrates credibility, financial discipline and compliance with regulations. This fosters trust amongst stakeholders like investors, partners and vendors.

How to Get a Company PAN Card 

To apply for a business PAN card online, follow these steps:

• Visit https://www.protean-tinpan.com/ and select “Physical Mode” under “Online PAN Services.”
• Choose 'New PAN Indian Citizen (Form 49A)' and select the entity category (e.g., Partnership Firm, Association of Persons).
• Enter the entity’s full name in the last name field and the date of incorporation.
• Select Yes/No for physical copy; skip Aadhaar details.
• Provide the company’s name, income details, and office address.
• Find and enter the AO code using the Protean website’s AO code search.
• Attach required documents (e.g., certificate of registration, partnership deed).
• Provide the authorised person’s details and city for the declaration.
• Pay the ₹107 fee.
• Review and submit the form; complete Aadhaar authentication to generate Form 49A.
• Receive acknowledgement and form via email.
• Download, sign, and send the form with documents to Protean’s address.
• Protean processes the application, and the PAN card is dispatched upon receipt from the ITD.

Conclusion

A PAN card is mandatory for every business entity or organisation in India. Although it is a simple 10-digit code, it is immensely significant in smoothing financial operations, ensuring funding access and building stakeholder trust. Treating it as a priority for your company is crucial, irrespective of your scale or vintage.

FAQs

1. Why do companies need a PAN card?

A PAN card is mandatory for companies to file taxes, open bank accounts, and conduct financial transactions in India. It helps the government track transactions and ensure tax compliance.

2. What is the difference between a PAN card for individuals and a business PAN card?

A personal PAN card includes an individual’s photo, name, date of birth, and residential address. In contrast, a business PAN card lists the company’s name, registration date, and company/office address without a photo or signature. Both have a unique 10-digit alphanumeric number but are issued for different entities.

3. Is it safe to give the PAN card number to a company?

Sharing your PAN number with a legitimate company for tax or employment purposes is generally safe, but verify the company’s credibility first. Avoid sharing with unverified sources to prevent misuse or fraud.

4. Is PAN required for small businesses?

Yes, as per the Income Tax Department of India, all businesses, regardless of their size, turnover, or income, are required to obtain a Permanent Account Number (PAN).

5. How do companies verify a PAN card?

Companies verify PAN cards through online portals like Protean eGov Technologies Limited (formerly NSDL)  by entering the PAN number or scanning the QR code on the card. This confirms the card’s authenticity and details.