Income Tax Taxation

What is the Difference between PAN and TAN?

To understand the difference between PAN and TAN, first, we will discuss “What is PAN?” and “What is TAN?”

What is PAN?

• PAN means Permanent Account Number which is a unique 10 digit number issued by the NSDL to any individual or company.
• It is used by the person at the time of filing an income tax return.
• It is a unique code which is issued to any individual or entity and is valid across India.
• It serves as an Identity Proof for an individual.
• The main purpose of the PAN is to bring a universal identification to all financial transactions and to prevent tax evasion by keeping a track of monetary transactions.
• PAN is unique to each individual and is valid for the lifetime of the holder.
• It is issued under Section 139A of the Income Tax Act.
• PAN is optional and voluntary like driving license, Aadhar, etc but it is mandatory if any person needs to file Income Tax Returns, tax deduction at source, etc.

What is TAN?

• TAN means Tax Deduction and Collection Number. It is a 10 digit alphanumeric number allotted to an entity who is eligible to deduct or collect tax on payments made by them under the Income Tax Act, 1961.
• Under section 203A of the Income Tax Act 1961, it is mandatory for all assessee who is liable to deduct TDS to quote this TAN number in all communications regarding TDS with the Income Tax department.

What is The Procedure for Obtaining PAN and TAN?

• The application for PAN/TAN can be made online at the NSDL website or at Tax Information Network Facilitation Center (TIN-FC).
• TAN is applied in Form 49B and PAN Application can be made in Form 49A.
• TAN is to be quoted at the time of Filing TDS Return and payment of challan by an entity while PAN is quoted at the time of filing IT returns with the Income Tax Department.
• Mainly three documents are required for applying PAN i.e. Proof of Identity, Proof of Address and Proof of Date of Birth.
• It normally takes 7-8 working days to get a PIN number once the application is duly submitted to the concerned department.

What is The Difference Between PAN and TAN?

• PAN is a ten-digit code allotted to the assessee on the registration with the IT department who are involved in the financial transaction exceeding a particular threshold limit.

TAN is ten-digit alphanumeric code, allotted to persons or entities who are liable to deduct or collect tax at source.

• The application must be made in Form 49A for Indians and 49AA for foreigners while Form 49B for TAN.
• It is issued under section 139A of the Income-tax Act, 1961^[1] while TAN is issued under 203A of the Income Tax Act,1961.
• It is required at the time of filing and submission of IT return while it is required for the assessee who is deducting or collecting any tax from any person.
• PAN is a kind of universal identification for all financial transactions and also as an Identity proof of an individual which is accepted all over India.

Our Recommendation: Section 145 of the Income Tax Act,1961.