In the landscape of finances and taxes, terms like PAN, TAN, & TIN come up a lot. Even though they sound similar, they each serve different purposes. PAN, TAN, & TIN are used for tasks like filing income tax returns, deducting and collecting taxes and generating payment challans.
If you want to use each of them, you should first know each in detail. Remember that if you don’t follow the rules for these documents, you could face penalties. So, it’s crucial to know their specific uses and comply with the regulations.
In this post, we’ll explore the differences between PAN, TAN, and TIN in detail.
What is TAN?
TAN, or Tax Deduction and Collection Account Number is a unique 10-digit alphanumeric identifier issued by the Income Tax Department. This number is important for everyone responsible for deducting or collecting taxes at the source. Essentially, TAN works as a tracking mechanism to ensure that the tax deducted or collected is properly accounted for.
If you are involved in tax deduction or collection, it is mandatory to obtain a TAN. You must use this number while filing TDS (Tax Deduction at Source) or TCS (Tax Collected at Source) returns, as well as on challans, certificates, and any other documents required by the Income Tax Department. When a user properly quotes TAN, it helps maintain accurate tax records and ensures compliance with tax regulations.
Are you Eligible for TAN?
Here are the kinds of people or establishments eligible for TAN.
- Businesses or Corporations
Companies that deduct tax at source for various payments such as employee salaries, professional fees, or rent must obtain a TAN.
- Individual Entreprenuers
If your business operations involve activities requiring TDS (Tax Deducted at Source) or TCS (Tax Collected at Source), you are required to have a TAN.
- Charitable Trusts & NGOs
These organizations often conduct activities that require tax deductions or collections which make a TAN necessary for their operations.
- Government Departments & Agencies
Any government body that engages in transactions which involve tax deduction or collection must have a TAN to ensure compliance with tax regulations.
- Freelancers & Professionals
If you are a freelancer or professional where services involve payments subject to TDS, you will need to apply for a TAN.
- Educational Institutions
Institutions like schools, colleges, and hospitals often need to deduct taxes on certain transactions, which necessitates the need for a TAN.
What is TIN?
TIN, also known as Tax Identification Number, is a unique 11-digit number issued by a state’s Commercial Tax Department. Unlike PAN and TAN, TIN is specifically designed for businesses to track their operations. Remember that it is incredibly essential for businesses registered under VAT (Value Added Tax) as it helps identify them during the movement of goods between states.
The TIN serves as an identifier for businesses, allowing authorities to monitor transactions and ensure that correct taxes are applied. Whenever goods are moved across state lines, the TIN helps track these transactions and ensure compliance with tax regulations.
Who is eligible to apply for TIN?
TIN, or Tax Identification Number, is essential for various businesses and entities. Let’s examine who is eligible to apply for TIN.
- Business Owners & Traders
It involves businesses and traders engaged in the sale and purchase of goods an services that are subject to VAT or GST must obtain a TIN to ensure tax compliance.
- Manufacturers
Any manufacturing entity that falls under VAT/GST regulations is required to have a TIN. It helps to track the sales and purchase of goods they produce,
- Service Providers
Businesses that offer services to attract VAT/GST need a TIN for proper tax reporting and compliance.
- eCommerce Operations
Online marketplaces and sellers engaged in digital commerce must apply for a TIN to manage and report transactions accurately under VAT/GST.
- Importers & Exporters
Businesses involved in the international trade of goods and services which require VAT/GST compliance are eligible to apply for a TIN.
What is PAN?
PAN, or Permanent Account Number, is a unique 10-digit alphanumeric identity code which is assigned to every tax payer in India. It is an important document for anyone involved in financial transactions and for paying income tax. Without a PAN, individuals cannot fulfil their tax obligations.
Issued and regulated under Section 139A of the Income Tax Act, PAN is one of the most important identity documents in India. It is required for filing tax returns that make tax payments and must be shared with tax deductors to ensure accurate TDS deduction from the taxpayer’s income. Furthermore, PAN also plays an important role in various financial transactions, making it an essential tool for managing one’s financial affairs.
Who is eligible to apply for PAN?
Here is a list of the persons eligible for PAN card.
- Individuals
Any person who earns income, whether through a job, business, investments, or other sources, must apply for a TAN. Generally, individuals should be 18 years old or older to apply, but in cases where a minor is involved, legal guardians can apply for a PAN on behalf of the minor.
- Companies
Businesses, including firms and corporations, are required to obtain a PAN for conducting financial transactions and for the deduction of tax at source. Remember that PAN is extremely important for these entities to comply with tax regulations and ensure proper tax reporting.
Comparison Between PAN, TIN, & TAN
Let’s compare PAN, TIN, and TAN based on the following parameters.
| Parameters | TAN | PAN | TIN |
| Governing Entity | It is managed by the Income Tax Department. | PAN, on the other hand, is also managed by the Income Tax Department. | TIN, in the end, is managed by the commercial tax department of each state. |
| Governing Regulation | TAN is generally controlled under Section 203A of the Income Tax Act. | PAN, on the flip side, is controlled under Section 139A of the Income Tax Act. | In the case of TIN, the regulation may vary from one state to another. |
| Identification code | TAN is a 10-digit code. | On the other hand, PAN is also a 10-digit code. | It is a unique 11-digit code. |
| Who Issues it? | It is issued by the Income Tax department. | PAN, just like TAN, is issued by the income tax department. | TIN, on the other hand, is issued by the GST department. |
| Who Needs it? | TAN is generally required for anyone responsible for deducting or collecting taxes at the source. | PAN, on the other hand, is required by the taxpayers, non-taxpayers, foreign nationals, and entities. | On the contrary, TIN is required by businesses involved in VAT/GST transactions. |
Frequently Asked Questions
Listed below are the frequently asked questions related to PAN, TIN, & TAN.
Yes, a minor can use the PAN of their father, mother, or guardian but only if they don’t have any taxable income.
No, you should not use your PAN in place of a TAN number. Remember that PAN & TAN serve different purposes, so they cannot be changed interchangeably.
No, with the introduction of GST, the GSTIN has replaced TIN for most purposes. Furthermore, you only need to use GSTIN unless VAT is still applicable to the goods your business deals with.
In the case of TAN, it takes about 7 to 15 days after applying, while PAN takes around 2 weeks. On the other hand, you will get TIN within 2 to 6 working days.
Yes, an organization can have all three. TAN is needed if the organization is required to deduct or collect tax from service providers like auditors or contractors. PAN is required for tax purposes, while TIN is used for businesses involved in VAT or GST-related transactions.
