TAN vs PAN: Key Differences

In India, TAN and PAN are two essential documents for tax purposes. Many people often confuse them as being the same but they are actually quite different. In this blog post, we shall discuss TAN vs PAN and explain what their key differences are. 

What is TAN?

TAN stands for tax deduction and collection account number. It is a unique 10-digit alphanumeric code issued by the Income Tax Department to all persons who have the responsibility of collecting Tax Collected at Source (TCS) or deducting Tax Deducted at Source (TDS). 

After deduction of TDS/collection of TCS, the persons have to deposit the tax with the government and then file TDS/TCS return using the TAN. It is mandatory to quote TAN number on all TDS/TCS returns filed, according to Section 203A of the Income Tax Act 1961.

Salient Features of TAN

The salient features of TAN are explained below:

• TAN is a 10-character alphanumeric code.

• It is required by individuals and businesses that deduct or collect tax at source.

• Section 20A of IT Act 1961 mandates quoting TAN on TDS and TDS returns.

• Because of TAN, the government can easily track tax deductions and collections made by individuals/businesses and reduce instances of money laundering.

• Securing TAN ensures compliance with the IT Act 1961 and helps individuals/businesses avoid penalties and legal repercussions.

• Only one TAN per individual/business is allowed. Holding more than one TAN is illegal. 

• If an incorrect TAN is quoted, then a penalty can be imposed under Section 272BB(2) of Income Tax Act.

What is PAN?

PAN stands for permanent account number. It is a ten-digit alphanumeric code, issued in the form of a physical polycarbonate card a.k.a PAN card or online in the form of ePan card, by Income Tax Department.

PAN is an essential document for tax purposes. It serves as a valid proof of identity. It is required for filing income tax returns, bank account opening and high value financial transactions. 

Salient Features of PAN

The salient features of PAN are explained below:

• PAN contains 10 digits in total.

• For filing Income Tax Return, it is mandatory to have a PAN number.

• For high value transactions like buying real estate, vehicles and deposits over Rs. 50,000, having a PAN is mandatory.

• PAN is a widely accepted proof of identity across India.

• It helps the government to track financial transactions and prevent evasion of tax.

• For availing government schemes’ benefits, PAN is often a necessary document.

• During the business registration, PAN information must be provided.

• For various purposes, a PAN card is counted as a legal identity document with a photograph. It is often accepted while obtaining services such as a gas connection, water connection or other utilities.

• When immovable property value exceeds Rs. 5 lakhs, the buyer and seller’s PAN details are required by law for any kind of property transaction, sale or purchase. If there is joint ownership, all the owners’ PAN card numbers are needed.

• When you are purchasing jewelry or bullion that is worth more than Rs. 5 lakhs, PAN data needs to be submitted.

Difference Between TAN and PAN

In the table below, we have explained the difference between TAN and PAN:

Conclusion

In this blog post, we explained to you PAN vs TAN. The main difference between PAN and TAN lies in the fact that PAN is mandatory for all taxpayers whereas TAN is required only for persons or entities that are responsible for deducting or collecting tax at source. If you need assistance in TDS return filing, you can connect with Registrationwala’s tax consultants! 

Frequently Asked Questions (FAQs)

Q1. How many characters does TAN contain?

A. TAN contains 10 alphanumeric characters.

Q2. How many characters does PAN contain?

A. PAN contains 10 alphanumeric characters.

Q3. How do PAN and TAN differ from each other?

A. PAN is mandatory for all taxpayers. However, TAN is only mandatory for those who deduct or collect tax at source. This is the basic difference between PAN and TAN.

Q4. Does every taxpayer require TAN?

A. No, only individuals and businesses that deduct TDS or collect TCS require TAN.

Q5. Are TAN and PAN the same?

A. No, TAN and PAN are not the same. TAN is only required by individuals/businesses deducting TDS or collecting TCS. PAN is required by all the taxpayers.

Q6. Which form do I need to file for the TAN application?

A. You need to file form 49B for TAN application.

Q7. Which form do I need to file for PAN application?

A. If you are an Indian citizen, you need file form 49A for PAN application. If you are a foreign national, then you need to file form 49AA for PAN application.

Q8. What is validity of PAN?

A. PAN comes with lifetime validity.

Author: Manish Kumar

I’m Manish Kumar, a content management specialist. I simplify complex financial and regulatory topics into clear, insightful content. As a regular contributor to the Registrationwala portal, I provide updates on finance, Tax, government schemes, compliance, and other incorporation information. My goal is to keep you informed about key industry developments and their impact.