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
- 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.
What are the functions of TIN?
The Indian Revenue System (IRS) utilizes TIN on different documents, such as tax statements, reports, and returns.
Every Indian business is issued a unique TIN, which enables them to sell their goods and services to other enterprises anywhere in the country.
Companies must include their TIN on any document submitted to the IRS to pay tax or claim tax benefits.
Who needs to apply for a TAN number?
All individuals or businesses that are required to collect or deduct tax at source on behalf of the Income Tax Department must apply for TAN.
Without a TAN, the returns will not be accepted by the TIN facilitation centers. Moreover, banks will not accept the challans for any TCS or TDS payments without the TAN.
The process to apply for TAN
You may either apply online or visit the nearest TIN facilitation center of the National Securities Depository Limited (NSDL). Here is the procedure to apply for a TAN online.
- Visit the TIN-NSDL website (www.tin-nsdl.com)
- Under the ‘Services’ tab, select ‘TAN’ and click the ‘Online’ option
- Opt for ‘New TAN’
- Choose from the list of ‘category of deductors’ and select the relevant option to be redirected to Form 49B
- Complete the form and click ‘Submit’
After confirmation, the acknowledgment page is displayed with the following information.
- 14-digit acknowledgment number
- Applicant status and name
- Contact information
- Payment details
- Space for signature
- Take a printout and send it to the NSDL office in Pune
Difference between PAN, TAN, and TIN
People generally do not know the difference between PAN and TAN and get confused as both are issued by the Income Tax Department and are 10-digit alphanumeric codes.
To make it easy to understand for you, the below table reflects the comparison between PAN, TAN, and TIN:
The first five alphabets represent different information and are followed by four numbers and an alphabet
Comprises four alphabets followed by five numbers and an alphabet
Comprises 11 numbers wherein the first two represent the state code
It is a universal code of identification for conducting financial transactions
Streamlining collection and deduction of tax at source
Tracking VAT-related activities in India
Who needs it
Every taxpayer and assessee
Every business entity or individual collecting or deducting tax at source
All dealers and traders who have VAT liability
Section 139A of the Income Tax Act, 1961
Section 203A of the Income Tax Act, 1961
Varies between one state and another
Form 49A for Indians
Form 49AA for foreign applicants
Varies from one state to another
Documents required for application
Identity proof, address proof, individual applicants need photographs and age proof
Online application acknowledgment to be signed and sent to NSDL office
Registration proof, PAN, and owner’s identity proof
State-wise additional documents may be required
INR 107 if communication address is Indian
INR 989 if the address is outside the country
INR 55 plus service tax
Varies between different states
Apply for a PAN card today. The online application process takes only a few minutes.
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