Introduction

Trusts and endowments play a pivotal role in charitable, religious, educational, and social development activities across India. These entities often manage significant assets, generate income, and receive donations—making them subject to taxation under specific provisions of the Income Tax Act, 1961. The Permanent Account Number (PAN), a unique identifier issued by the Income Tax Department, is central to ensuring the transparency, accountability, and compliance of trusts and endowments. PAN not only serves as the legal identity for tax filings but also facilitates exemption applications, donation tracking, and regulatory disclosures.

PAN as the Legal Tax Identity

Every trust or endowment, whether public or private, must obtain a separate PAN in its name. This PAN serves as the official tax identity of the entity, linking all financial, donation-related, and income-generating activities to the trust’s legal framework. Without PAN, a trust cannot register with tax authorities or avail of any tax exemptions.

Mandatory for Registration under Sections 12A and 80G

To claim tax exemption on income and to enable donors to claim deductions, trusts must register under Section 12A (for exemption) and Section 80G (for donor benefits). The PAN of the trust is mandatory in both registrations. It ensures that only verified entities can seek these benefits and also allows the Income Tax Department to monitor exempt income and its application.

Filing Income Tax Returns for Trusts

Even if exempt under Section 11 or 12, all registered trusts are required to file annual income tax returns using their PAN. These returns are filed through Form ITR-7, which captures income, application of funds, surplus accumulation, and exemptions claimed. The PAN ensures that the return is tied to the correct legal entity for future assessments and verifications.

Donation Tracking and Form 10BD Filing

From FY 2021–22, charitable trusts and institutions must file Form 10BD, detailing donations received during the financial year. Each donation must be linked to the donor’s PAN, while the filing is done under the PAN of the trust. This PAN-to-PAN mapping enhances transparency and prevents fictitious claims by donors or institutions.

PAN for TDS Compliance

If a trust is liable to deduct TDS (Tax Deducted at Source) on professional fees, rent, or contractual services, it must obtain a TAN (Tax Deduction and Collection Account Number), which is applied using the trust’s PAN. PAN helps trace TDS deductions and ensures proper credit to the payees through Form 26AS.

Verification of Investments and Assets

Trusts are required to invest their funds in approved modes as per Section 11(5). The PAN of the trust is linked to its investments in fixed deposits, shares, or mutual funds. This linkage allows tax authorities to verify whether funds are appropriately invested and not misused for non-charitable purposes.

PAN for Audit and Assessment

Trusts with income exceeding ₹2.5 lakh (before exemption) are required to get their accounts audited. Auditors submit reports using the trust’s PAN, and the Income Tax Department uses it to conduct scrutiny assessments, examine utilization of funds, and ensure that the trust complies with legal and financial norms.

Surrender of PAN for Dissolved Trusts

If a trust is wound up or merged, its PAN must be surrendered by filing a request to the jurisdictional assessing officer. This ensures that the financial identity of the trust is formally closed and avoids future misuse or liability under the same PAN.

International Reporting and PAN Use

For trusts receiving foreign contributions under FCRA or managing foreign endowments, PAN is used to report such income in compliance with FATCA/CRS obligations. This ensures proper tracking of cross-border charitable transactions and prevents illicit fund flows.

Conclusion

PAN is indispensable in the taxation and regulatory compliance of trusts and endowments in India. It serves as a single, authoritative link between the trust’s financial operations, income tax filings, donor records, and government audits. By anchoring transparency and accountability, PAN strengthens public trust in charitable institutions and supports the equitable enforcement of tax laws. As digital compliance becomes the norm, PAN will continue to be the backbone of governance for all nonprofit and endowment structures.

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