In this article, Soni Kashyap discusses the difference Between TIN, TAN and PAN.

Comparison between PAN, TAN and TIN

PARAMETER	PAN	TAN	TIN
Issuing Agency	Income Tax Department	Income Tax Department	Commercial Tax Department of respective state
Code type	10 digit alphanumeric code	10 digit alphanumeric code	11 digit numeric code (first 2 digits are the state code)
Code content	The first 5 digits are alphabets representing various information, followed by 4 numbers and an alphabet	A TAN is composed of 4 alphabets, followed by 5 numbers, with an alphabet as the last digit	A TIN is composed of 11 number
Purpose	PAN acts as a universal identification code for financial transactions	Streamline deduction and collection of tax at source	Track VAT related activities in the country
Who should own it	Every taxpayer/assessee	Every individual/entity who has to deduct or collect tax at source	Any dealer or trader who is liable to pay VAT
Laws which account for it	Section 139 A of the IT Act of 1961	Section 203A of Income Tax Act of 1961	Different states have different Acts under which TIN is applicable
Fines/Penalties	A penalty of Rs 10,000 can be imposed for failure to comply with the rules	A penalty of Rs 10,000 can be imposed for failure to comply with the rules	Penalties vary from state to state
Form to be used for application	Form 49A (Indians), Form 49AA (Foreigners)	Form 49B	Forms vary from state to state
Documents required to apply	Valid ID proof, address proof, photographs (in case of individuals) and proof of age (date of birth)	None. In case of online application the signed acknowledgement needs to be submitted	Proof of registration, PAN, ID proof of owner, etc. (documents required are likely to vary depending on the state in which an entity applies)
How many can one own?	Only one	Only one	Only one
Cost of applying	Rs.107 if the communication address is located inside India and Rs.989 if the address is outside India	Rs.55 plus service tax	It varies from state to state

India has a well-developed tax structure with a three-tier federal structure, comprising the Union Government, the State Governments and the Urban/Rural Local Bodies. Income tax is the scariest and complex topics to understand for many of us. The calculation of tax and various terms associated with it make it very difficult to grasp. To collect and manage tax collection from various incomes, the income tax department issues various unique identification numbers to collect and manage tax collection, which are beneficial such as Permanent Account Number (PAN), Tax Deduction and Collection Account Number (TAN) and Tax Identification Number (TIN) to entities such as individuals, companies and trusts. TIN, TAN and PAN are such terms that confuse a lot of people as all these terms looks so similar. But all are different from each other. And knowing the differences and meaning of these terms is very important for any Entrepreneur.

In many of the cases, the PAN and TAN identification are must. In respect of filing tax in any financial year all these terms are very important. Let us look into the meanings and differences of TIN, TAN and PAN.

Taxpayer Identification Number (TIN)

TIN or TaxPayer Identification Number is a unique eleven-digit number. It is allotted by the Commercial Tax Department of respective State. It has established as a repository of tax related information by NSDL on the behalf of Income Tax Department. The idea behind designing this is to make tax administration more effective, furnishing of returns convenient, reduce compliance cost and it also brings greater transparency. Through TIN Facilitation Centers (TIN FC) and web-based central system, it connects the nationwide users. It is very essential to mention TIN number on all VAT transaction and corresponding. TIN number is used to identify dealer registration under VAT. The starting two digits of TIN indicate the state code which issued it and other nine digits of TIN number may differ by the state governments.

TIN is applied for selling of goods or products within a state or between two or more states. It is a modern way of collection, processing, monitoring and accounting of direct taxes. It is required for tax documents, such as quarterly or estimated payments and annual filings.

Who Needs TIN Number?

Traders/Dealers/Exporters/Manufacturer are required to register for TIN Number. For a new registration under VAT or Central Sales Tax a new TIN will be allotted as registration number.

By replacing old registration/CST number of Manufacturer/Traders/Exporters/Dealers, a new TIN number has stipulation to them by all the state commercial Tax Department of India. On all Quotations/Orders/Invoices, TIN Number should be mentioned by both Sending Company and Receiving Company. That TIN number can also be considered as CST number when it is needed.  TIN number or VAT registration is very essential for selling goods or products like manufacturers, exporters, shopkeepers, dealers, ecommerce sellers selling goods, etc.

What is the procedure for TIN registration?

TIN can be applied either offline via TIN facilitation centres across the country or through online platform TIN-NSDL which acts on behalf of the Income Tax Department of India.

The documents that are needed to apply for a TIN number are given below:

1. ID Proof / Address proof / PAN card of an individual with six passport size photographs.
2. Address proof of that Business premises.
3. 1st Sale / Purchase Invoice, copy of LR/GR & payment/collection proof with bank  statement is needed.
4. Surety/Security/Reference.

These may differ slightly from State to State. Once these documents are checked and scrutinized, a unique eleven digit TIN number is produced to the applicant. The Central Sales

Tax number of an applicant can be changed into TIN number on request by the Tax Department.

Functions of TIN are as follows:

• Receiving and storing of TDS returns in electronic format (e-TDS).
• Receiving and storing of Tax Payment information (OLTAS).
• For the e-Return Intermediaries registration.
• Processing of applications for issuance of Tax Deduction Account Numbers (TAN).
• Processing of applications for issuance of Permanent Account Number (PAN).
• Collection and processing of annual Information Return (AIR) from specified persons for  specified transactions on behalf of ITD.
• The details of taxes paid and TDS deducted for them (based on PAN) on the internet the assesses can see.

Salary, interest, dividend, interest on securities, winning from lottery, horse races, commission and brokerage, rent, fees for professional are few types of  incomes for which TIN Number is applicable

Types of Tax ID Numbers

A TIN is a generic term and which refers to several different kinds of identifying numbers, these are as follows:

• To an individual, a social security number issued.
• To Non-U.S citizens who are currently residing, and often working, in the U.S an   Individual Taxpayer Identification Number (ITIN) is issued.
• To businesses and Non-Profit organizations, an Employer Identification Number (EIN) is issued.
• The adoption of children from outside of the U.S, an Adoption Taxpayer Identification Number (ATIN) is issued.
• To identify accountants and firms which involved in preparing tax documents, a Preparer Taxpayer Identification Number is issued.
• To issue payroll and make tax payments, the small businesses need a TIN as an Employer Identification Number. And for applying an EIN, the IRS is requires to complete a Form SS-4.

Tax Deduction and Collection Account Number (TAN)

Tax Deduction and Collection Account Number or TAN is a unique ten digit alphanumeric number which is allotted to those who are supposed to deduct or collect Tax at source or TDS. Registration of TAN Number is very important for businesses deducting tax at source. Every Assessee liable to deduct TDS which is required to apply for a TAN Number and it is quoted in all TDS Returns, TDS Payments and any other communication regarding TDS with the Income Tax Department.

In all TDS returns and challans while depositing the tax in designated Bank quote of Tax Deduction Account Number (TAN) is mandatory as per the section 203A of the Income Tax Act,1961.

If any of the other reason TDS returns from any of the Individual will not be received or if Tan is not quoted and challans for TDS payments will not be accepted and if they fail to apply for TAN or not using the same in the specified documents then it attracts a penalty of Rs.10,000. Once TAN is obtained, TDS returns must be filed quarterly by the business.

If the values of the properties are above Rs.50 lakh then TDS have to be deducted at the rate of 1% of the property by a property buyer as per the Income Tax Rules and the property buyer does not have to require a TAN to do the same.

Who Need TAN Number

Basically those who are paying a salary or wages or a commission to any individual then that person need a TAN

• Central/State Government/Local Authority needs TAN Number.
• Statutory/Autonomous Bodies must have TAN Number.
• Company needs TAN Number.
• Branch/Division of a Company requires TAN.
• Individual/Hindu Undivided Family like Karta needs TAN.
• Branches of Individual Business
• Firm/Association of Persons/Trusts also needs TAN Number.

Procedure to Apply for TAN Number

Application for TAN can be made both offline and through online mode. Application fee for applying for TAN is INR 62. Mode of payment can be anyone from the following, Demand Draft/Cheque/Credit Card/Debit Card/Net Banking. A complete application form of TAN can be submitted online at the NSDL website or at the “Tax Information Network Facilitation Center” (TIN-FC). NSDL established these centers and the Central Government appointed an intermediary across India. Where the application for TDS is made online, then the acknowledgment (a PDF file) that generated just after filling up of the form must be forwarded to NSDL.

An acknowledgement (a PDF file) would consist of following elements:

• That 14-Digit acknowledgement number
• Application’s status
• Applicant’s name
• Personal/Contact Details of an individual (i.e address, Email ID and Phone Number)
• Details of Payment modes
• Signature

This acknowledgement duly signed along with the Cheque/Demand Draft shall be sent to NDSL. All the details are verified by the NDLS and then it sent to the Income Tax Department. Once application form is approved, the Department allocates a unique 10 digit TAN Number.

TAN structure is as follows:

ASKA99999G: First four characters are letters, next five are numbers, last character is a letter.

The starting three characters of the TAN represent the city or state where the TAN was issued.

The first character of name of the collector is represented by the fourth character of the TAN Number.

More than one TAN

In case where the applicant has already been allotted a TAN, then he/she cannot apply again as having or using more than one TAN is illegal. Different branches/divisions of a collector may apply for separate TAN for each branch/division.

Cancellation of TAN

In case of duplicate TANs have been allotted then the TAN which have been using regularly should be used from now. The duplicate TANs should be surrendered/submitted for cancellation by using or filling “Form for Changes or Correction in TAN” that an individual can download it from the NSDL website.

Permanent Account Number (PAN)

Permanent Account Number or PAN is a unique 10-digit alphanumeric identity number which is allotted to each taxpayer by the Income Tax Department under the supervision of the Central Board of Direct Taxes. It is mandatory for any financial transactions such as receiving taxable salary or professional fees, sale or purchase of assets above specified limits, buy mutual funds and many more and it also serve as an identity proof of an individual. PAN is used to check on financial transaction that could carry a taxable component by the Central Board of Direct Taxes.

It should be used for payment of taxes, assessment, tax demand, tax arrears, etc., and as well as for investment, loans and any other business activities.

For tracking financial transactions, it is used as a universal identification key that might have a taxable component to prevent tax evasion. If a person changes his/her address throughout India then the PAN number will not get affected it will be same as before. PAN Card is mandatory for any financial transaction over the amount of Rs.50,000.

Who must apply for PAN?

• A person who has a taxable income in India, including foreign nationals, who pays taxes here.
• In the previous financial year, a person who had total sales, turnover or gross receipt exceeding Rs.5 lakh, needs to apply for PAN.

How to apply for PAN?

A PAN card is issued by the I-T department, but since July 2003, the front-end of the process has been outsourced to UTI Technology Services Ltd and the National Securities Depository Ltd (NSDL). It can be applied either online i.e. through internet or offline.

Process of applying for PAN Card

• It can be apply for PAN either online i.e. through internet or offline.
• An online application can be made either through the portal of NSDL or portal of UTITSL.
• Once the application form for PAN and payment is accepted online, then the applicant is required to send the required documents which must be self-attested through courier/post to NSDL/UTIITSL.
• Offline PAN Card Application Form 49A for manual submission.
• Form 49AA is also used for application of New PAN Card but this form can be used by NRIs, entities incorporated outside India and unincorporated entities formed outside India.
• From 16/01/2014 the charges for applying for PAN online have been increased to Rs.105 (including service tax) for Indian communication address and Rs.971 (including service tax) for foreign communication address. And for the Payment of application fee credit/debit card or net-banking can be used.
• An applicant should affix two recent color photographs with white background and the (size must be 3.5 cm x 2.5 cm) in the space provided on the form.
• The applicant must be filled AO code (Area Code, AO Type, Range Code and AO Number)
• Applicant will get a unique 15 digit number on acceptance of this form. This number can be used for tracking the status of the application.
• It takes almost a week for getting the Permanent Account Number and round about 15-20 days for getting the physical card. And it is delivered through Post at the given addresses.

Structure of PAN Card

The Income Tax department decoded the PAN number in such way :

For Example: PAN is AFZKA1804A.

The first three characters of the PAN are in alphabetic series which are from AAA TO ZZZ (i.e AFZ)

The fourth character of PAN represents the status of the PAN holder (i.e “K”).

Here “K” represents an Individual

And fifth character of PAN represents the first character of the PAN holder’s last name/surname.

The next four characters in the PAN(i.e 1804) which are in numerical series running from 0001 to 9999.

Last character in the PAN (i.e A) is an alphabetic check digit.”

What does PAN Card contain?

All contain of PAN card are given below:

• PAN
• Name
• Date of Birth
• Father’s Name
• Photograph and
• Signature of PAN holder

Details for Other Taxpayers

• PAN
• Name and
• Date of Incorporation or Formation
• Decoding the PAN number

Once PAN card is generated, it is valid for the lifetime of the assessee and throughout the India. Even if the change involves address of the assessee or the assessing officer the identity of the PAN does not change. If any changes made in the details which were given at the time of applying for the PAN, like address, then it should be informed to the department by giving the details in the form for Request For New PAN Card Or/ And Changes or Correction in PAN Data.

PAN is mandatory for every individual, whose annual income is taxable, which means:

• Rs.2.5 lakh or more for individuals below the age of 60 years,
• More than Rs.3 lakh for  those who are above the age of 60 years(senior citizens)
• And Rs.5 lakh or more for those who are above the age of 80 years(very senior citizens
• Any person who is receives income, after deduction of all the taxes at source or who are entitle to pay excise duty and so on, they needs to have a PAN.
• And for the financial transactions too, one has to furnish PAN or Form No. 60 if PAN is not available.
• In a recent time, it has been made mandatory by the Central Board of Direct Taxes(CBDT) for all account holders in banks and post offices to provide PAN or Form No. 60.

Conclusion

TIN, TAN and PAN all these terms looks so alike that many of the people get confused. But in reality all the terms are so different from each other. Where the PAN, TAN are issued by Income Tax Department while the TIN is issued by Commercial Tax Department of respective state. PAN, TAN both are a 10-digit alpha numeric identity while TIN is 11 digit numerical code. Only those who are responsible for deducting or collecting tax need to get a TAN. And there are many more differences which were discussed above.

References

https://www.bankbazaar.com/pan-card/pan-tan-difference.html

https://www.quora.com/Taxes-in-India-What-is-the-difference-between-TAN-and-TIN-regarding-income-tax

http://www.differencebetween.info/difference-between-pan-tan-and-tin

https://www.bemoneyaware.com/blog/difference-between-pan-tan-tin/