In its initial phase, every business is required to undertake a documentation process, and furnish several vital documents and essential details to incorporate its operations. In fact, the need for documentation and submitting vital information is not limited to the inception of the business.
For instance, throughout the venture, entrepreneurs are required to submit information like - PAN on various occasions. This reinstates the fact that all entrepreneurs must become well-versed about these details and streamline the process accordingly.
Nevertheless, the fact that terms like TIN, TAN, and PAN are so similar might confuse the concerned person or business. Nonetheless, contrary to popular belief, these are quite different from one another and proffer separate pieces of information. So, to avoid any confusion, individuals must try to find out their underlying differences and have a clear understanding about them.
Gathering such information is also crucial for other purposes. For instance, learning about PAN and its functions is essential, while opting for different types of credit, including invoice discounting from KredX.
Taxpayer Identification Number or TIN is essentially a unique 11-digit number that is allotted by the State’s Commercial Tax Department. Usually, TIN is established as a repository of all tax-oriented information by the NSDL.
TIN applies to the sale of goods within the state or outside it. Generally, it serves as a modern means of collecting, processing, accounting, and monitoring direct taxes.
Above all, the TIN number proves to be a useful tax document during quarterly or estimated annual filings. Also, TIN is considered necessary to sell goods and products and can be further used as a CST number, as and when required. Usually, traders, exporters, manufacturers, and dealers are required to register for TIN.
Tax Deduction and Collection Account Number is a unique 10-digit alphanumeric number. Generally, it is allotted to individuals who are supposed to collect or deduct tax at source (TDS). They must also register the TAN number. In fact, every assessee who is liable to deduct TDS must apply for TAN, and quote the number for all TDS payments, returns, etc.
Generally, entities that pay a wage, salary, or commission to any individual need a TAN number. For instance, these following entities need a TAN –
One must note that using or possessing multiple TAN is illegal. Individuals must get their duplicate TANs surrendered for cancellation. To initiate this process, one needs to file ‘Form for Changes or Correction in TAN’. However, different divisions or branches of a collector may decide to apply for separate TAN.
PAN or Permanent Account Number is a unique 10-digit alphanumeric number that is allotted to every taxpayer, under the Central Board of Direct Taxes’ supervision. Typically, individuals who generate taxable income in India must apply for PAN. Also, those whose previous annual turnover exceeded Rs. 5 lakhs are required to apply for PAN.
You must note that PAN proves useful in checking financial transactions and serves as a universal identification key that helps monitor tax evasion. Above all, Permanent Account Number comes in handy for paying taxes, tax arrears, tax demand, etc. Furthermore, it is used to pay loans, investments, and several business activities.
Notably, a PAN card is deemed valid in all over India for the entirety of an assessee’s lifetime. Recently, the Central Board of Direct Taxes made it mandatory for all account holders in post offices, and banks to provide either Permanent Account Number or Form number 60.
Following is a glance through the fundamental differences among TIN, TAN and PAN in brief.
This table below elucidates the noteworthy differences –
|
Parameter |
TIN |
TAN |
PAN |
|
Issuing agency |
Commercial Tax Department |
The Income Tax Department |
The Income Tax Department |
|
Binding law |
Depends on the state |
Section 203A of ITA 1961 |
Section 139A of the Income Tax Act of 1961 |
|
Code |
11-digit numeric code |
10-digit alphanumeric code |
10-digit alphanumeric code |
|
Purpose |
It helps to track VAT-related activities |
It helps to streamline the collection and deduction of taxes at all sources. |
It is a universal identification code for all financial transactions. |
|
Holder |
Dealers and traders who have to pay VAT. |
All entities who deduct tax at source. |
All taxpayers and assessee. |
|
Penalties |
Varies from one state to another. |
Rs. 10000 |
Rs. 10000 |
|
Form |
Depends on the state. |
Form 49B |
For Indians Form 49A. For Foreigners Form 49AA. |
|
Cost of applying |
Varies from one state to another. |
Rs. 55+ service tax |
Rs. 107(for India-based address) and Rs. 989 (for address based outside India) |
|
Documents required |
PAN, identity proof, proof of registration, etc. |
Only signed acknowledgement needs to be submitted for online application. |
Required documents include – Address proof, identity proof, proof of date of birth, photographs, etc. |
Like discussed, each of these numbers plays a distinct role that is vital and comes in handy in different ways. For instance, PAN is an essential document not just for paying taxes but also for availing working capital from KredX.
The PAN helps to complete the verification process and allows businesses to access funds within 24 hours to 27 hours* by availing our invoice discounting services. It also helps businesses to benefit from our other growth capital-oriented services like – revenue-based financing and lease rental discounting, without any hassle.
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