What is the difference between TAN, PAN and TIN?
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What is the difference between TAN, PAN and TIN?

  • Highlights

  • Simplify taxation by understanding TAN, PAN and TIN

  • TAN is allocated as a unique number for tax-deductors

  • Tax-payers are allocated PAN

  • TIN is allocated to entities registered under VAT

TAN, PAN and TIN are one of the common terms you may encounter, when you file your returns or contact the Income Tax Department. Understanding these terms beforehand, can simplify the world of tax for you, making the process of filing returns easier. Here’s a detailed lowdown on TAN, PAN and TIN, so you can understand how these terms are different.

TAN

TAN or Tax Deduction and Collection Account Number is an identification number that is required by an individual/company/ organisation to streamline both deduction and collection of tax at source (TDS/TCS). The number is allotted by the Income Tax Department. 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.

PAN

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 that is 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 and is one of the most important forms of identity for every Indian citizen. This proof of identity is used in the filing of various financial documents, like tax payment, returns, tax arrears, etc. It is also needed for all those individuals who are liable to receive any income after TDS.

TIN

Unlike PAN and TAN, which are issued by the Income Tax Department, TIN or Taxpayer Identification Number is issued by the Commercial Tax Department of the respective State Governments. It is used to identify businessperson/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 businessperson 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 characters, all numeric, the first two digits reflecting the state’s code as suggested by the Ministry of Home Affairs, and the remaining nine signifying 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 you can inch closer towards financial freedom.

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