When it comes to taxes, one needs to be registered with the appropriate authority, who allots a number, for the identification of the assessee. The terms PAN and TAN are used in this context. PAN stands for Permanent Account Number which is a unique identification number, for income tax purposes.
TAN, on the other extreme, expands to Tax deduction and collection Account Number, which identifies every person who is liable for the deduction or collection of tax at source.
Both PAN and TAN are issued by the income tax department, but they serve different purpose and so, cannot be used in place of one another. In this article, you can find all the substantial differences between PAN and TAN, take a read.
Content: PAN Vs TAN
|Basis for Comparison
|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 a ten-digit alphanumeric code, assigned to the persons or entities who are accountable to deduct or collect tax at the source.
|49A in case of Indians and 49AA in case of foreigners
|Issued under section
|139A of Income-tax Act, 1961
|203A of the Income-tax Act, 1961
|It is must be quoted at the time of preparation and submission of Income tax Return.
|It is must for the assessees, who are liable to withhold tax from the amount paid or payable under the Income Tax Act.
|Common identification for all financial transactions.
|Furnishes TDS details collected by any entity.
Definition of PAN
Permanent Account Number shortly known as PAN is a alphanumeric code, comprising of ten characters. It is issued by the Income tax department, to those assessees who make application in the prescribed format. The account number is distinct for every assessee and has a lifetime validity, throughout the country.
It is issued in the form of plastic card, used as an identifier, by the taxation department and links all the financial dealings, such as tax payment, refund, TDS or TCS credit, etc. of the assessee with the department.
PAN aims at linking various documents with respect to the assessment, payment, arrears of taxes of the assessee, to ensure easy access of information, which in turn helps in widening the tax base and reducing tax evasion. It is obligatory to quote PAN on the Income tax return.
Definition of TAN
TAN or otherwise known as Tax deduction and collection Account Number, is a distinct alphanumeric code alloted by the Income tax Department to any person who is liable to deduct or collect tax at source. It is a ten digit number which must be quoted while filing TDS/TCS return, or any other interaction with the income tax department concerning TDS/TCS.
On the failure of application of TAN or not quoting it in the relevant documents or forms, the deductor has to face the penalty of Rs. 10000.
Key Differences Between PAN and TAN
The points given below are relevant with respect to the difference between PAN and TAN
- PAN is a distinctive identification number, assigned to every assessee, Income Tax Department, who are involved in the financial activity beyond a particular threshold limit. On the other hand, TAN is also a distinctive identification number, assigned to the entities, who are accountable to deduct or collect tax at the source.
- To apply for Permanent Account Number, an individual or entity should submit form 49A in case of Indians and 49AA in case of foreigners. On the contrary, one can make application of Tax deduction and collection Account Number, with form 49B.
- A PAN number is allotted to the assessee under section 139A of Income-tax Act, 1961. Conversely, the income tax department assigns TAN number under section 203A of the Income-tax Act, 1961.
- PAN number is required to be mentioned at the time of preparation and submission of Income tax Return. As against, TAN number is needed in case of the entities who are liable to withhold tax from the amount paid or payable under the Income Tax Act.
- The PAN card serves as a universal identification for all financial transactions, with respect to income tax department. Unlike, the TAN number is used for furnishing TDS details collected by any entity.
- Issued by
Income Tax Department
10 digit alphanumeric code
Rs. 10000 is levied for the violation of rules.
Can be made either online or offline
PAN is not only used for income tax purposes but it also acts as one of the major identification proof. It also helps in preventing tax evasion, by recording all monetary dealings. However, one cannot use PAN for TAN, because it is mandatory for a deductor to acquire TAN even if he has PAN. Nevertheless, in the case of tax deducted at source on the acquisition of land and building under section 194A, the dedutor need not possess TAN and thus can use PAN for TDS remission.