Permanent Account Number PAN is a code issued by the Department of Income Tax. It is a 10-digit number-and-alphabet combination and is unique to each individual. Identify this number on your parent's card. It would be something like this - ABCDP4678H. This number enables the department to monitor financial transactions of the holder. It also helps the Income Tax department to keep track of the tax paid or evaded by an individual. The first ever such card was issued in 1964. It is also issued to foreign nationals such as investors.
PAN was introduced to facilitates linking of various documents, including payment of taxes, assessment, tax demand, tax arrears etc. relating to an assessee, to facilitate easy retrieval of information and to facilitate matching of information relating to investment, raising of loans and other business activities of taxpayers collected through various sources, both internal as well as external, for detecting and combating tax evasion and widening of tax base.
PAN enables the department to link all transactions of the person with the department. These transactions include tax payments, TDS/TCS credits, returns of income/wealth/gift/FBT, specified transactions, correspondence, and so on PAN, thus, acts as an identifier for the person with the tax department.