What is a PAN?
PAN is the 10-character permanent account number issued by the Income Tax Department. How to read one and why it sits inside every GSTIN.
PAN (Permanent Account Number) is a 10-character alphanumeric identifier issued by the Income Tax Department. Every taxpayer has one, individual or entity, and it does not change.
Reading a PAN
Take AAPFU0939F:
- Characters 1–3: an alphabetic series
- Character 4: entity type — this is the useful one
- Character 5: first letter of the surname (individuals) or of the entity name
- Characters 6–9: sequential number
- Character 10: checksum letter
The fourth character tells you what kind of entity you are dealing with:
| Code | Entity |
|---|---|
P | Individual |
C | Company |
F | Firm / LLP |
H | Hindu Undivided Family |
T | Trust |
A | Association of Persons |
B | Body of Individuals |
G | Government |
So a "company" whose PAN has P in the fourth position is an individual trading under
a business name — worth knowing before you contract.
PAN inside GSTIN
Characters 3–12 of a GSTIN are the entity's PAN. If a supplier's stated PAN does not appear inside their stated GSTIN, one of the two is wrong.
What people get wrong
Ignoring the fourth character. It is the fastest available signal about who you are actually contracting with.
Assuming PAN proves the business exists. For a company, that is what CIN and the MCA register are for.
On Bidancer
PAN is collected and verified as part of business KYC, and cross-checked against the GSTIN rather than accepted alongside it.
MSME
MSME means micro, small and medium enterprises — a legal classification in India with real consequences for procurement and payment terms.
Performance Bank Guarantee (PBG)
A PBG is a bank's promise to pay the buyer if the contractor fails to perform. How it works in Indian contracts, and how it differs from EMD.