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.
Know what is TAN or Tax Deduction and Collection Account Number is an identification 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.
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.