Filing for AY 2024-25 is coming soon
Keep calm and sign up for early access to our super filing platform

PAN and TAN – Understanding the Meaning and Difference

In the realm of income tax filing and dealings with the Income Tax Department, you may often come across the terms PAN and TAN. Understanding the significance of these terms beforehand can greatly simplify the process of filing your income tax return. In this article, we will delve into the question of "What are PAN and TAN?" We will explore the differences between the two and provide a step-by-step guide on obtaining these essential documents. So let's get started!

Introduction to PAN and TAN

PAN and TAN are two vital documents issued by the Income Tax Department of India. These documents play a crucial role in various financial transactions, tax deductions, and collections. It is essential to understand the differences between PAN and TAN, as they cannot be used interchangeably.

Permanent Account Number (PAN)

A PAN, also known as a Permanent Account Number, is a 10-digit alphanumeric identification number issued by the Income Tax Department under section 139A of the Income-Tax Act, 1961. This unique number helps the department track all financial transactions, including tax payments, tax returns, and other related activities.

Eligibility for Obtaining a PAN Card

A PAN card is required for individuals, Hindu Undivided Families (HUFs), minors, partnership firms, limited liability partnerships (LLPs), trusts, and companies. Anyone who is eligible to receive income after deduction of tax at source or who is liable to pay excise duty must possess a PAN card.

Procedure for Obtaining a PAN Card

To obtain a PAN card, you can visit either the NSDL or UTIITSL official websites. Both websites offer two different application forms: Form 49A for Indian citizens and Form 49AA for foreign nationals. Alternatively, you can apply for a PAN card in person by filling out the form on the NSDL's official website and following the instructions provided.

Documents Required for PAN Application

The following documents are required for PAN application:

  • For Individual Applicants: Aadhaar, passport, voter ID, and driver's license (POI/POA).
  • For Hindu Undivided Families: HUF affidavit signed by the head of the HUF, along with POI/POA information.
  • For Companies: Certificate of Registration of the Company.
  • For Firms/Limited Liability Partnerships (LLPs): Registrar of Firms/Limited Liability Partnerships Certificate of Registration and Partnership Deed.
  • For Trusts: Copy of the Trust Deed or Charity Commissioner's Certificate of Registration Number copy.
  • For Registrar of Co-operative Societies or Charity Commissioner: Certificate of Registration Number.
  • For Passport and Other Documents: Passports, Person of Indian Origin (PIO)/Overseas Citizenship of India (OCI) card issued by the Indian government, bank statement from the country of residence, and a copy of an NRE bank statement in India.

Tax Deduction Account Number (TAN)

TAN, or Tax Deduction Account Number, is a 10-digit alphanumeric identification similar to PAN. However, TAN is specifically required for individuals responsible for deducting or collecting taxes under section 203A of the Income Tax Act, 1961.

Who Needs a Tax Deduction Account Number (TAN)?

TAN is required by the following entities:

  • Governments at the federal, state, and local levels.
  • Branches or divisions of companies.
  • Branches of individual businesses.
  • Trusts, firms, and associations of persons.
  • Individuals and Hindu Undivided Families (HUFs).

Procedure for Obtaining a TAN

Individuals can apply for a TAN online or offline. When applying online, applicants must log in to the official NSDL website and complete the application form. After submission, an acknowledgment number will be generated. The applicant must then send the acknowledgment number, along with the required documents and fees, to the NSDL office. In the case of offline applications, applicants must visit an NSDL center, submit the TAN application form, relevant documents, and pay the fee.

It is important to note that having two TAN cards is illegal, and applicants cannot apply for another.

Documents Required for TAN Registration

Applicants do not need to provide any documents while applying for a new TAN. If applying online, the only requirement is to send a signed acknowledgment slip.

A Comprehensive Comparison of PAN and TAN

To better understand the difference between PAN and TAN, let's compare them based on various parameters:

Parameters

PAN

TAN

Issuing Organization

Income Tax Department

Income Tax Department

Code

10-digit alphanumeric number

10-digit alphanumeric number

Objective

Used for financial transactions and serves as identification proof

Used for tax deduction and collection

Who Should Obtain It?

Taxpayers, non-taxpayers, foreign nationals/entities

Individuals responsible for deducting or collecting taxes

Provision

Section 139A of the Income Tax Act, 1961

Section 203A of the Income Tax Act, 1961

Punishments

Fine of Rs. 10,000

Fine of Rs. 10,000

Forms

Form 49A for Indian citizens, Form 49AA for foreign nationals

Form 49B

Number of Cards

1

1

Conclusion

In conclusion, PAN and TAN are essential documents issued by the Income Tax Department to monitor taxpayers' transactions and ensure compliance with tax regulations. While PAN serves as identification and facilitates financial transactions, TAN is specifically required for tax deduction and collection purposes. Understanding the distinctions between PAN and TAN is crucial to fulfilling your tax obligations properly.

If you need assistance acquiring a PAN or TAN, please consult our experts, who will guide you through the process seamlessly.

Remember, PAN and TAN are not interchangeable, so ensure that you provide the correct document whenever necessary. Stay compliant and enjoy a hassle-free tax filing experience!

Additional Information:

  • It is important to keep your PAN and TAN documents secure and readily accessible whenever required.
  • Always update your PAN details, such as address changes, by notifying the Income Tax Department.
  • Failure to obtain a PAN or TAN or non-compliance with regulations can result in fines and penalties.

author

The Tax Heaven

Mr.Vishwas Agarwal✍📊, a seasoned Chartered Accountant 📈💼 and the co-founder & CEO of THE TAX HEAVEN, brings 10 years of expertise in financial management and taxation. Specializing in ITR filing 📑🗃, GST returns 📈💼, and income tax advisory. He offers astute financial guidance and compliance solutions to individuals and businesses alike. Their passion for simplifying complex financial concepts into actionable insights empowers readers with valuable knowledge for informed decision-making. Through insightful blog content, he aims to demystify financial complexities, offering practical advice and tips to navigate the intricate world of finance and taxation.

Frequently Asked Questions

PAN stands for Permanent Account Number. It is a unique alphanumeric identifier issued by the Income Tax Department to individuals, companies, and entities for tax purposes.

The primary purpose of PAN is to track financial transactions and ensure compliance with tax laws. It is used for filing income tax returns, conducting financial transactions, and communicating with the Income Tax Department.

A PAN card typically contains the holder's name, PAN number, date of birth (in the case of individuals), and a photograph.

TAN stands for Tax Deduction and Collection Account Number. It is a 10-digit alphanumeric identifier issued to entities responsible for deducting or collecting tax at the source, such as employers or business entities.

The primary purpose of TAN is to facilitate the deduction and collection of taxes at the source, such as TDS (Tax Deducted at Source) on salaries, payments to contractors, or other specified transactions.

Subscribe to the exclusive updates!