Difference Between PAN, TAN and TIN 2023

Dealing with taxes can be a real challenge, but what’s even more challenging is trying to understand all of the terms and jargon associated with filing your taxes! It can be an overwhelming process. 

Keeping up with all the tax terminology can be difficult as there are a lot of terms that sound similar but have different implications. To make the filing process easier and more efficient, familiarizing yourself with commonly used terms while dealing with income taxes or consulting the Income Tax Department is essential.  

This way, you can save time and also gain useful knowledge. To grasp the basics of income tax, it is essential to know the differences between the frequently used terminology PAN, TAN & TIN. Let us help by taking you through a comprehensive understanding of each. 

Parameters PAN TAN TIN 
Who Issues it? Income Tax Department Income Tax Department Commercial Tax Department of Respective State 
Code 10-digit Alphanumeric number 10-digit Alphanumeric number 11-digit code 
Purpose Used for financial transactions 
Acts as a proof of identity 
Used for buying/selling or property, car etc 
Used for deduction and collection of Tax Track VAT-related activities 
It’s important for?  Taxpayers/ Non-Taxpayers 
Foreign nationals 
Foreign Entities 
Tax deductors and collectors under section 203A   Dealers, exporters, traders 
Laws Section 139A of the Income Tax Act of 1961 Section 203A of the Income Tax Act of 1961 Different States have Different Laws 
Application fee There is a cost of 107 rupees for communication addresses within India and 990 rupees for those outside India.  ₹55, plus service tax Varies depending on the state 
Forms to fill Form 49A for Indian Citizens 
Form 49AA for Foreign Nationals 
Form 49B Varies as per the States 
How many can a person own 

What is TAN?  

In India, the Income Tax Department issues Tax Deduction and Collection Account Numbers (TAN). They are alphanumeric numbers of 10 digits. It is used for deducting or collecting tax on payments made to third parties. TAN is a unique number assigned to each taxpayer and helps in tracking the taxes collected or deducted at the source. It also serves as identification proof for taxpayers while filing their income tax returns. TAN helps in simplifying the process of taxation, thereby making it easier for taxpayers to comply with their tax obligations. 

Who should apply for TAN?  

According to Section 203A of the Income-tax Act, 1961, anyone who deducts or collects tax at source must apply for a TAN (Tax Deduction and Collection Account Number). This is a requirement to guarantee proper compliance with income tax laws. 

What is PAN?

During the income tax filing season, taxpayers are assigned a 10-digit alphanumeric code called a Permanent Account Number (PAN). It is used to identify individuals, companies, and other entities for the purpose of tax filing. PAN serves as an identification proof for income tax purposes and it is mandatory for all financial transactions above a certain threshold. Furthermore, it helps in linking all the transactions of an individual or entity with the government. It also helps in keeping track of all financial activities of an individual or entity and thus helps in preventing any kind of fraud or money laundering.

Who should apply for PAN?  

PAN card can be applied for by the following: 

  • Individuals with a taxable income 
  • Foreign nationals 
  • Foreign entities 
  • Students, non-taxpayers 

What is TIN? 

A Taxpayer Identification Number (TIN) is an important document for every Indian taxpayer. It is a unique number assigned to taxpayers by the Income Tax Department (ITD) of the Government of India. The TIN helps the ITD to identify and track all income tax related activities of a taxpayer, such as filing returns, paying taxes, and claiming refunds. It also helps the ITD to ensure that taxpayers comply with their tax obligations. In addition, it can be used by other government departments and agencies for various purposes such as issuing permits or licenses. 

Who should apply for TIN? 

Obtaining a Tax Identification Number (TIN) from the local commercial tax department is necessary for any enterprise registered under Value Added Tax (VAT). This TIN will ensure that such businesses are able to engage in proper taxation. 

It’s worth noting that the Taxpayer Identification Number (TIN) is required to be used for both buying and selling goods, whether it’s within the same state or between different states. 

Conclusion 

In conclusion, PAN, TIN and TAN are three important identification numbers that are required for various business activities. The Income Tax Department of India issues PANs, which are 10-digit alphanumeric numbers. TIN is a 11-digit number issued to businesses by the Sales Tax Department of the respective state. Lastly, TAN is a 10-digit alphanumeric number issued by the Income Tax Department of India to facilitate tax deduction and collection at source. Each of these numbers has its own significance and they must be obtained in order to conduct business activities in an efficient manner. 

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