What Are PAN and KYC for Investing in India?

Before you can invest in Indian stocks or mutual funds, two things are mandatory: a PAN (Permanent Account Number) and completed KYC (Know Your Customer). They are the identity backbone of the whole system.

PAN — your tax identity

A PAN is a unique ten-character alphanumeric ID issued by the Income Tax Department. It links all your financial activity for tax purposes — your demat account, trades, and capital gains are all tied to it.

KYC — verifying who you are

KYC is the one-time identity-and-address verification you complete with a broker or fund house (now largely digital/Aadhaar-based). SEBI mandates it to prevent fraud and money laundering. Once done, your KYC is recognised across the industry.

How the accounts link up

• Your bank account funds trades and receives payouts.
• Your trading account places orders on the exchange.
• Your demat account holds the shares you own.
• PAN + KYC tie all three to your verified identity.