TAN, PAN, and TIN are common terms you may encounter when filing your returns or contacting the Income Tax Department. Understanding these terms beforehand can simplify the world of tax for you, making filing returns easier. Here’s a detailed lowdown on TAN, PAN and TIN, so you can understand how these terms are different.
Know what TAN or Tax Deduction and Collection Account Number identifies an individual/ company/ organisation requires to streamline both deduction and collection of tax at source (TDS/ TCS). The Income Tax Department allows the number. It consists of 10 characters - four alphabets followed by five numerals and an alphabet in the end.
It is mandatory to mention TAN Number in every document related to TDS or TCS by the deductor. Failure to quote TAN can result in the rejection of TDS payments and returns by the banks. Registration for TAN can be done both online and offline by filling and submitting form 49B.
While TAN is a number allocated to tax-deductors, PAN or Permanent Account Number is allotted to taxpayers. PAN is also a 10-digit identity number mandated by the Income Tax Department for any individual who carries out financial transactions or pays the Income Tax.
PAN is issued under section 139A of the Income Tax Act, 1961, one of the most important forms of identity for every Indian citizen. This proof of identity is used to file various financial documents, like tax payments, returns, tax arrears, etc. It is also needed for all those individuals who are liable to receive any income after TDS.
Additional read: Apply PAN card online
Additional read: How to apply for a duplicate PAN card?
TIN or Tax Identification Number is issued by the Commercial Tax Department of the respective state governments. It is used to identify a business person/ entity who is registered under VAT. It is also commonly known as VAT (Value Added Tax), CST (Central Sales Tax) number or Sales Tax Number.
TIN is mandatory for every business person who pays VAT, making it easier for them to track all their VAT payments under a single roof and is also used for sales that are carried out between two or more states. It has eleven numeric characters; the first two digits reflect the state’s code as suggested by the Ministry of Home Affairs. The remaining nine signify the district or town where the businessperson/ entity is registered.
All of us relate to these terms in one way or another, especially when filing taxes or applying for TDS certificates. Understanding these basic differences between TAN, PAN and TIN can make your financial lives easy so that you can inch closer towards financial freedom.
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