Difference Between PAN, TAN, and TIN
Terms related to Income Tax can often be confusing, sounding similar but having different meanings and purposes. With numerous words commonly popping up when we file taxes or approach the Income Tax Department for clarification, knowing them can ease the entire process, offering us valuable insight.
Some of the most used terms we come across are PAN, TAN, and TIN, each having subtle nuances that can simplify your word of tax.
Know the Terms - PAN, TAN, and TIN
Permanent Account Number - A Permanent Account Number or PAN is a unique 10-digit alphanumeric code that is provided to every taxpayer or assessee in the country. It is issued by the Income Tax Department and is a mandatory requirement for every entity indulging in economic activity beyond a certain financial limit in the country.
Tax Deduction and Collection Account Number - TAN is a unique 10 digit alpha numeric code whose primary purpose is related to deduction or collection of tax. All entities who deduct or collect tax must have a TAN, quoting it in their TDS or TCS documents.
Taxpayer Identification Number - TIN or Taxpayer Identification Number is an 11-digit numeric code that is mandatory for traders or dealers who participate in transactions that attract VAT. All businesses which participate in interstate trade are expected to have a TIN. A TIN is often called the VAT Number or Sales Tax Number and individuals should not confuse these terms.
Differences Between PAN, TAN, and TIN
PARAMETER | PAN | TAN | TIN | |
Issuing Agency | Income Tax Department | Income Tax Department | Commercial Tax Department of respective state | |
Code type | 10 digit alphanumeric code | 10 digit alphanumeric code | 11 digit numeric code (first 2 digits are the state code) | |
Code content | The first 5 digits are alphabets representing various information, followed by 4 numbers and an alphabet | A TAN is composed of 4 alphabets, followed by 5 numbers, with an alphabet as the last digit | A TIN is composed of 11 numbers | |
Purpose | PAN acts as a universal identification code for financial transactions | Streamline deduction and collection of tax at source | Track VAT related activities in the country | |
Who should own it | Every taxpayer/assessee | Every individual/entity who has to deduct or collect tax at source | Any dealer or trader who is liable to pay VAT | |
Laws which account for it | Section 139 A of the IT Act of 1961 | Section 203A of Income Tax Act of 1961 | Different states have different Acts under which TIN is applicable | |
Fines/Penalties | A penalty of ₹ 10,000 can be imposed for failure to comply with the rules | A penalty of ₹ 10,000 can be imposed for failure to comply with the rules | Penalties vary from state to state | |
Form to be used for application | Forms vary from state to state | |||
Documents required to apply | Valid ID proof, address proof, photographs (in case of individuals) and proof of age (date of birth) | None. In case of online application the signed acknowledgement needs to be submitted | Proof of registration, PAN, ID proof of owner, etc. (documents required are likely to vary depending on the state in which an entity applies) | |
How many can one own? | One | One | One | |
Cost of applying | ₹107 if the communication address is located inside India and Rs.989 if the address is outside India | ₹55 plus service tax | Varies from state to state | |
Criteria Required for TIN
A Taxpayer Identification Number (TIN) is important for individuals or entities who are involved in commercial or taxable activities such as:
- Exporters
- Dealers
- Traders
- Manufacturers
Criteria Required for TAN
A TAN (Tax Deduction and Collection Account Number) is essential for any person or organization responsible for deducting or collecting tax at source. Given below are the entities and individuals who requires TAN:
- Organisations or Companies
- Government bodies such as central, state, and local authorities
- Individual professionals or Hindu Undivided Families (HUFs)
- Partnership firms, trusts, and associations of individuals or groups
- Separate business units or divisions within a company
- Independent business outlets operated by individuals
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FAQs on Difference Between PAN, TAN, and TIN
- Is TIN also referred to as a VAT number?
Yes, in the case of intrastate transactions, a TIN number is also referred to as a VAT number.
- How can I apply online for a TAN?
You can apply for a TAN online by visiting the NSDL website and following the instructions.
- Can I have more than one TAN?
No, you cannot hold more than one TAN.
- Who requires a TIN?
For the purpose of processing taxes, certain non-resident and resident aliens, their spouses, and their dependents who cannot obtain Social Security numbers (SSNs) are the only ones who can obtain a TIN.
- Who can apply for a TAN?
A TAN must be applied for by any individual who must deduct or collect TDS. Usually, this refers to businesses and people who run operations that need them to make payments to other taxpayers. These guidelines must also be followed by those who are responsible to collect taxes at source.
- Can an individual have a PAN, TAN, and TIN?
Yes, all three identity cards may be held by an organisation engaged in a commercial activity.
- Does a company need to quote the GSTIN and the TIN?
All current indirect taxes were to be replaced by the Goods and Services Tax (GST) regulations, which combined them into a single bracket. Therefore, it is enough to simply mention the GSTIN. Unless VAT is relevant to the goods the business deals with, the TIN is not needed.
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