Direct and Indirect Taxation · PAN

Who Is Required to Obtain PAN Under Income-tax Act 2025

Updated 10 October 2026 · Fact-checked

A PAN is compulsory for a person whose total income exceeds the maximum amount not chargeable to tax, for a person carrying on business or profession whose turnover or gross receipts exceed ₹5,00,000, and for a person who must file a return of income. Others may apply voluntarily. Apply the three triggers one by one.

Understand Persons Required to Obtain PAN

A Permanent Account Number (PAN) is a ten-character alphanumeric number that the Income-tax Department gives to one person for life. It links that person's tax payments, returns and high-value transactions. Think of it as your tax identity.

Not everyone must have one. The law lists the persons who are required to obtain a PAN. If you do not fall in any listed category, you may still apply voluntarily. Many students lose marks by treating 'may apply' and 'must apply' as the same thing.

The main compulsory triggers are three. First, the person's total income for the year exceeds the maximum amount not chargeable to tax (the exemption limit that applies to that person). Second, the person carries on business or profession and the total sales, turnover or gross receipts are, or are likely to be, more than ₹5,00,000 in the year. Third, the person is required to furnish a return of income, for example a trust or institution that must file a return even though its income is exempt.

Notice the wording 'are or are likely to be'. You do not wait for the year to end. If you expect turnover above the limit, you apply in time. Also notice that the income test looks at the person's own total income, so a person with income below the limit and turnover below the limit is not caught by the first two tests.

The law also lets the Central Government notify further classes of persons, for example those entering specified financial transactions, who must quote or obtain a PAN. Persons who act for others (such as a director, partner, trustee, karta or principal officer) may also be asked to have a PAN in respect of the entity's dealings. Read the question facts and match them to one trigger at a time. Always check the exact thresholds against the official text of the Income-tax Act, 2025 and the rules before the exam, because limits can be revised.

Key rules to remember

Income trigger: Total income > maximum amount not chargeable to tax → PAN compulsory; Use the exemption limit that applies to that person. The test is on total income, not gross receipts.
Business or profession trigger: Sales / turnover / gross receipts (actual or likely) > ₹5,00,000 in the year → PAN compulsory; Applies to a person carrying on business or profession. 'Likely' means expected turnover counts. Exactly ₹5,00,000 does not exceed the limit.
Return filing trigger: Person required to furnish a return of income → PAN compulsory; Covers persons who file even when income is exempt, such as specified trusts and institutions.
Voluntary application: Any person not covered above → may apply, not must; A voluntary PAN is valid and works the same way.
Notified classes: Central Government may notify other classes of persons; For example persons in specified financial transactions. Mention it as an extension, do not invent limits.

How to solve Persons Required to Obtain PAN questions

Use this method on any 'Is PAN compulsory?' question. Test each trigger separately and then conclude.

1Identify the person: individual, HUF, firm, company, trust or other. Note whether the person is resident or non-resident.
2Find the person's total income for the year and compare it with the maximum amount not chargeable to tax for that person. If it is higher, PAN is compulsory.
3If the person carries on business or profession, compare actual or likely turnover, sales or gross receipts with ₹5,00,000. If it is higher, PAN is compulsory.
4Check whether the person is required to furnish a return of income under the Act, even if income is exempt. If yes, PAN is compulsory.
5Check for any special fact in the question, such as a notified class or a specified financial transaction, and apply it.
6If no trigger applies, state that PAN is not compulsory but can be obtained voluntarily.
7Write the conclusion with the trigger named, for example: 'PAN is required because turnover exceeds ₹5,00,000.'

Quickest way: Three-trigger scan

When to use it: Use for MCQs and short-answer questions where the facts give income, turnover or a filing obligation.

Underline the income figure, the turnover figure and any mention of return filing.
Ask: income above the limit? turnover above ₹5,00,000? return required? One yes is enough.
If all three are no, choose 'not compulsory, voluntary allowed'.
Watch for equal-to-limit traps: exactly ₹5,00,000 is not above it.

Common mistakes in Persons Required to Obtain PAN

Saying turnover of exactly ₹5,00,000 requires PAN.
Students read the limit as '₹5,00,000 or more'.
Fix: The test is 'exceeds'. Equal to the limit does not trigger it, unless likely turnover goes above it.
Using income instead of turnover for a trader, or the reverse.
Both tests look similar and students mix the numbers.
Fix: Apply the income test to total income and the business test to sales, turnover or gross receipts. Check both.
Ignoring 'likely to be' and waiting for the year to end.
Students think only actual figures matter.
Fix: If expected turnover will exceed the limit, PAN is required. Read the question for forecasts.
Assuming exempt-income persons never need PAN.
Students link PAN only with tax payment.
Fix: If the person must file a return even with exempt income, such as a specified trust, PAN is compulsory.
Confusing 'must obtain' with 'may obtain'.
Voluntary PAN is common in practice, so students call it compulsory.
Fix: Write clearly: not compulsory under the triggers, but the person may apply voluntarily.
Quoting a section number from memory.
Students carry over numbers from the Income-tax Act, 1961.
Fix: Use the 2025 Act's terms such as 'tax year' and quote a section number only if sure. A correct rule without a number earns marks.

Worked examples

Example 1

Ramesh runs a small grocery shop. His turnover in the tax year is ₹4,80,000 and is not expected to rise. His total income is below the exemption limit that applies to him. Is he required to obtain a PAN?

Show the solution

Income test: total income is below the maximum amount not chargeable to tax, so this trigger is not met.
Business test: turnover ₹4,80,000 is less than ₹5,00,000, and no increase is expected, so this trigger is not met.
Return test: no return is required of him on these facts, so this trigger is not met.
No trigger applies.

Answer: Ramesh is not required to obtain a PAN. He may apply voluntarily.

Example 2

Meera, a freelance designer, expects gross receipts of ₹7,00,000 in the tax year. Rohit, a salaried employee, has total income of ₹2,10,000, below his exemption limit. Shree Charitable Trust has fully exempt income but must furnish a return of income. State who must obtain a PAN.

Show the solution

Meera: she carries on a profession and her likely gross receipts of ₹7,00,000 exceed ₹5,00,000, so the business or profession trigger applies.
Rohit: total income ₹2,10,000 is below the limit, he has no business or profession, and no return is required of him, so no trigger applies.
Shree Charitable Trust: it is required to furnish a return of income even though income is exempt, so the return-filing trigger applies.

Answer: Meera and Shree Charitable Trust must obtain a PAN. Rohit is not required to, but he may apply voluntarily.

Exam tips

In MCQs, check whether the figure equals or exceeds ₹5,00,000. Exactly ₹5,00,000 is the usual trap.
Write the trigger by name in written answers. Examiners give step marks for stating the condition and then the conclusion.
Keep 'compulsory' and 'voluntary' clearly apart in your final line.
Use 'tax year' and Income-tax Act, 2025 terms, never 'assessment year'.
Study this topic with application procedure and quoting of PAN, since questions often combine who must apply and when to quote.

Practice questions from PAN

Persons Required to Obtain PAN: frequently asked questions

Who is required to obtain a PAN under the Income-tax Act, 2025?

A person whose total income exceeds the maximum amount not chargeable to tax, a person in business or profession with turnover or gross receipts above ₹5,00,000, and a person required to furnish a return of income. The Central Government can also notify other classes.

Is the ₹5,00,000 limit based on profit or turnover?

It is based on total sales, turnover or gross receipts, not profit. Actual or likely figures for the year count.

Can a person with income below the limit get a PAN?

Yes. Any person may apply voluntarily, even if no trigger applies. The PAN works like any other.

Do non-residents need a PAN?

The same triggers apply. A non-resident whose total income exceeds the limit, or who must file a return, needs a PAN. A non-resident with no such obligation may apply voluntarily.