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Permanent Account Number (PAN) is a national identification number, issued to all taxpayers of India whose income is taxable. This number is issued by the Income Tax Office.

PAN structure is as follows: AAAAA9999A: First five characters are letters, next 4 numerals, last character letter.

PAN has to be given for all kinds of investments. This means that there is no limit above which this is required and this results in a situation where even one rupee of investment requires the number. Dematerialisation accounts (Demat accounts) and mutual funds investments are two areas where this rule is being enforced.

Most people believe that financial planning is required for their business as it plays an important role in this area. While this is true, it is equally important is that there is a need for financial planning for an individual also because the achievement of each individual’s financial goals is tough to achieve.

The requirement earlier was that in many areas like mutual funds and primary market issues the PAN would have to be quoted only when the investment was more than Rs 50,000. This kept small investors out of the requirement to quote the number every time.

Now every small investors will have to have this number otherwise the investment will be out of bounds for them. This might require some additional work for some investors, but it will also mean that tax authorities can track the entire investment of a person.

The PAN number can be considered to be similar to Social security number issued in United States to citizens and other legal residents.

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