✍️ Author: Amrut Chitragar   |   📅 Published on: January 13, 2023   |   🛠 Last Updated: July 10, 2025

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📌 This article is for educational use only. Please consult a SEBI-registered advisor before making financial decisions.
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📌 TL;DR – Quick Summary:
The 4th character of a PAN card helps identify whether the taxpayer is an individual, company, firm, trust, or HUF. This small letter is crucial for accountants and deductors to determine correct TDS rates and avoid penalties.

📌 Amrut Bonus Tool – Quick PAN 4^th Character Checker

🔍 Quick Check Your PAN Type:

Enter PAN:

Why the 4th Character of PAN Card Matters More Than You Think

📌 Visual: PAN card tool showing how the 4^th character helps decide TDS rates

Most of us look at our PAN card just as a formality—something we need to open a bank account or file income tax returns. But if you're a finance professional, accountant, or even a business owner who deals with TDS deductions, there's a tiny but powerful detail on that card you should never ignore — the 4th character of the PAN.

That single letter can help you instantly know the status of the PAN holder — whether they are an individual, a company, an LLP, a trust, or a government entity. And that directly impacts how much TDS you deduct, whether you're issuing a Form 16A, or preparing Form 26Q or 27Q.

👉 Watch this quick video to understand the PAN 4th character and avoid costly TDS mistakes:

🔍 How Does the 4th Character Help in Real Work?

Let’s say you receive an invoice from someone named “ABC Associates.” Sounds like a firm, right? But how can you be sure if it's a partnership, a company, or just an individual using a fancy name?

Here’s where PAN comes to the rescue. Just look at the 4th character:

• P = Individual
• F = Firm / LLP
• C = Company
• H = HUF
• T = Trust

This small detail saves you from wrong TDS deduction, mismatches in Form 26AS, and notices from CPC or the Assessing Officer.

📋 PAN 4th Character Table with Meaning

4th Letter	Represents
P	Individual (includes sole proprietors)
F	Firm / LLP
C	Company – Pvt Ltd, Public Ltd, OPCs
H	Hindu Undivided Family (HUF)
A	Association of Persons (AOP)
T	Trusts (including charitable or religious)
B	Body of Individuals (like clubs, societies)
L	Local Authority – municipalities, panchayats
J	Artificial Juridical Person – universities, hospitals
G	Government Departments

📌 Excel Trick to Extract 4^th Character from PAN

If you have a list of PAN numbers and want to extract the 4th character (which reveals whether it's an individual, company, firm, etc.), use this simple formula in Excel:

=MID(A1, 4, 1)

This will return the 4^th character from cell A1. You can drag the formula down to apply it to all 100 PANs easily.

📌 Real-Life Example for Accountants

Suppose you're booking professional fees worth ₹1,00,000 and PAN shows 4^th character as "P". That means it's an individual and TDS @ 10% under Section 194J applies.

But if you blindly assume it's a company and apply 2% or skip TDS, you could be liable for interest, penalties, and disallowance under Section 40(a)(ia).

📢 Pro Tip: Always validate the 4th PAN character when preparing TDS registers, vendor master, or during statutory audits.

⚖️ Why It Matters Legally

Under Income Tax Act, wrong classification of deductee or failure to deduct TDS properly can lead to:

• Interest under Section 201(1A)
• Penalty u/s 271C
• Disallowance of expenses under 40(a)(ia)

So, this tiny letter isn’t just a letter. It’s your shield against tax notices.

📌 Amrut Bonus Line – What If PAN Is Wrong in TDS Return?

If the PAN entered in your TDS return is invalid or incorrect:

• ❌ The deductee's TDS won’t reflect in their Form 26AS
• ⚠️ You may get a default notice from the Income Tax Department
• 💸 TDS may be treated as not deducted or paid, leading to interest under Section 201(1A)
• 🚫 Expense may be disallowed under Section 40(a)(ia)

✅ Always verify the PAN format and its 4^th character before filing.

❓ Frequently Asked Questions (FAQs)

1. What does the 4th character in PAN card mean?
It indicates the type of PAN holder – Individual (P), Company (C), Firm (F), HUF (H), etc. This helps in deciding the correct TDS rate.

2. Why is the 4th character of PAN important for TDS?
Because different PAN types attract different TDS rates. Using the wrong type may lead to defaults or penalties.

3. How can I check my PAN type online?
You can use the PAN 4th character online tool in this article – just enter your 10-digit PAN and get the type instantly.

4. What if PAN number is entered wrongly in TDS return?
The TDS won’t reflect in Form 26AS. You may get a default notice, and face interest and expense disallowance under 40(a)(ia).

5. Is there a tool to extract 4th PAN character in Excel?
Yes, use the formula =MID(A1,4,1) to extract the 4th letter from any PAN in Excel.

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✉️ Have doubts about PAN, TDS, or filing?
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