- A person may hold only one PAN. A second one is barred under section 262(8).
- PAN must be quoted in returns, tax challans and correspondence with the tax authorities.
- An Aadhaar-eligible holder who fails to intimate Aadhaar ends up with an inoperative PAN.
- Individuals now apply on Form 93 (formerly Form 49A), and Indian entities on Form 94.
On this page
How do you read a PAN?
Each of the ten characters means something. Take the department’s own sample, ALWPG5809L.
| Characters | Example | Meaning |
|---|---|---|
| 1 to 3 | ALW | Letter series from AAA to ZZZ |
| 4 | P | Holder type: P individual, C company, F firm or LLP, H HUF, T trust |
| 5 | G | First letter of the surname (or of the entity’s name) |
| 6 to 9 | 5809 | Sequential number |
| 10 | L | Check letter |
A C in fourth place means a company. That’s a quick sanity check when a vendor or contractor sends one. A mismatch between the holder type and the name on the invoice usually means a typo or the wrong document. The Income Tax Department’s guide to how a PAN is formed explains each position.
Why does every employee need a PAN?
Because tax credit follows the PAN. The TDS on salary you deposit is reported against it every quarter, then shown on the employee’s annual tax statement.
No PAN, higher tax. Section 397(2)(b) sets deduction at the higher of the normal rate or 20%.
Take a ₹15 lakh salary under the new regime. Normal TDS works out to about 6.8% of taxable salary. Without a PAN on file, the floor becomes 20%, nearly three times as much, until the employee hands one over.
Collect it during employee onboarding, on the same day you take bank details, the address proof and the signed appointment letter. Our guide to hiring employees in India lists the full joining document set.
Entities need one too. An Indian subsidiary gets its PAN alongside its Corporate Identification Number at incorporation. Its deduction account is a separate number altogether, the TAN, which goes on every TDS challan and return.
Do foreign companies need a PAN to hire through an EOR?
Not for the payroll itself. Under an employer of record, the EOR is the Indian employer and deductor. It uses its own PAN and TAN.
Your company only pays an invoice. A foreign company generally needs its own PAN once it earns taxable income in India or sets up an entity there. That’s one reason first-time hirers often start with employer of record services.
How does Remunance handle PAN checks for your new hires?
Remunance checks each new hire’s PAN before the first payroll. No surprise 20% deductions. The check sits inside onboarding that can finish in as little as 2 working days from a signed contract, next to identity checks in our background verification process. When you’re ready to add your first India hire, plan your India onboarding with us.
What else do people ask about PAN cards?
Is PAN mandatory for salaried employees in India?
Effectively, yes. Without it the employer must deduct tax at the higher rate, and the employee cannot file a return properly.
Can an NRI or foreign national get a PAN?
Yes. Foreign citizens apply on the form that replaced Form 49AA, now Form 95.
What happens if PAN is not linked with Aadhaar?
The PAN becomes inoperative. Section 262(6) requires holders eligible for Aadhaar to intimate it, and TDS can then run at the higher rate.
Planning a hire in India?
Our founding team has run payroll and hiring in India for 22+ years, first as Remunance Systems, which was later acquired by ADP.