The Income Tax Department issues each Indian taxpayer with a 10-digit alphanumeric number known as a PAN, or Permanent Account Number. A person's individual permanent account number is used by the department to track all of his or her tax-related transactions and information. This enables the taxman to connect all operations pertaining to taxes with the department.
PAN serves as a database for all individual transactions, including tax collected at source (TCS) and tax deducted at source (TDS) credits, income tax payments, and returns on gifts, investments, and other assets, among other things. Simply explained, the PAN gives the tax department a way to track down a person's transactions that are relevant to taxes.