Difference between TAN, PAN, and TIN

Income-tax-related terms can be confusing and have different objectives and meanings. TAN, PAN, and TIN are some common abbreviations you come across while contacting the Income Tax Department or filing your returns.

Each of these terms has its subtle nuances and understanding these beforehand can simplify the tax-filing procedure.

What is TAN?

Several people ask, “what is the TAN number?” Well, it stands for Tax Deduction and Collection Account Number.

TAN is a 10-digit alphanumeric code issued by the Income Tax Department and its primary purpose is related to the tax collected at source (TCS) and tax deducted at source (TDS).

It is compulsory for the deductors to provide TAN in the documents related to TCS or TDS. If you fail to mention TAN, there is a chance that the TDS payments and returns may be rejected by the banks. You may apply for TAN either online or offline via Form 49B.

What is PAN?

Wondering “what is PAN?” It is the Permanent Account Number allotted by the Income Tax Department to taxpayers. It is also a 10-digit alphanumeric code issued to individuals and other assessees who execute financial transactions or pay income tax.

PAN is allotted under section 139A of the Income Tax Act, 1961, and is a crucial identity proof for every Indian citizen. It is used for various purposes, such as filing financial documents like tax payments, returns, arrears, and more. Individuals who receive any income after TDS also require PAN.

What is TIN?

Confused about what a TIN number is? You are not alone. Taxpayer Identification Number (TIN) is issued by the State Government’s Commercial Tax Department.

Any individual business owner or company registered under Value Added Tax (VAT) is issued a TIN. It simplifies tracking various VAT payments and is also used for inter-state sales transactions.

It comprises 11 digits wherein the first two numbers represent the state code as per the Ministry of Home Affairs mandate and the remaining nine numbers represent the town or district where the business is registered.

Why and who needs TIN in India?

TIN is required by businesses for monitoring various transactions and assigning these to different enterprises. All ventures that seek registration under VAT or the Central Sales Tax (CST) must apply for TIN from the Income Tax Department.

Traders, manufacturers, exporters, and dealers of goods and services require TIN for sale and purchase transactions.

TIN is essential for the following reasons.

• Integration and easy availability of tax-related data on a single platform
• Easy access to business-related information, streamlining interstate and intrastate transactions
• Identification of various assets under the Income Tax Act, 1961

Although the documents required may vary from one state to another, here are some that are necessary for all states:

• Address and identity proof
• Reference
• Business address if the applicant is an enterprise
• Passport-sized photographs
• PAN card

The application procedure can differ between various states; however, here is how you can apply for TIN.

• Sign up on the VAT portal of the relevant state using a unique login ID.
• Complete the application form and upload the necessary documents.
• Verification is done by the Commercial Tax Department and a provisional certificate and TIN are allotted.
• An inspection is done by a VAT inspector before issuing the final certification.