PAN, TAN, and GSTIN are special identification numbers provided by various branches of the Indian government for tax and business compliance. Although they may sound alike, each has a specific legal and functional purpose. It is important for businesses, professionals, and individuals engaged in financial or commercial activities to know the differences between PAN, TAN, and GSTIN.
This blog explains their meanings, usage, and why it is essential not to get them confused with each other.
Introduction
Anyone doing business, generating taxable income, or handling government filings in India will encounter words such as PAN, TAN, and GSTIN. They are distinct numbers associated with various kinds of compliance some income tax, some indirect tax, and some solely for business functions.
While all three are government-issued identification numbers, they are not equivalent. Each plays a distinct function within India’s financial and tax system. Misconstruing them can result in errors in compliance, processing delays in returns, or even fines.
What is PAN (Permanent Account Number)?
PAN is short for Permanent Account Number. It’s a 10-character alphanumeric number assigned by the Income Tax Department to individuals, companies, and other organizations.
Purpose of PAN
PAN is employed for tracing income, tax payment, and financial transactions. It’s a common identifier for all tax-paying entities in India.
Who Needs PAN?
- All salaried people
- Freelancers and professionals
- Companies (proprietorships, companies, LLPs, etc.)
- Individuals/Entities undertaking high-value financial transactions (e.g., sale of property, investment in a mutual fund)
Where PAN Is Used
- Filing Income Tax Returns (ITR)
- Opening a bank account
- Purchasing or selling real property
- Investing in shares/securities
- Deducting or collecting TDS
- Obtaining loans or credit cards
What is TAN (Tax Deduction and Collection Account Number)?
TAN refers to the Tax Deduction and Collection Account Number. It is a 10-character alphanumeric code granted by the Income Tax Department, but it serves a totally different purpose from PAN.
Purpose of TAN
TAN is mandated for persons who are liable for deducting or collecting tax at source (TDS/TCS).
Who Needs TAN?
- Employers deducting TDS on employees’ salaries
- Companies paying contractors, rent, or professional fees
- Banks withholding TDS on interest payments
- Any organization (other than individuals who are not required to withhold TDS)
Where TAN Is Applicable
- Remitting TDS or TCS to the government
- Filing returns of TDS/TCS
- Issuing Form 16, Form 16A to deductees
- TDS deduction is being authenticated in the financial statements
Without a TAN, deduction or remittance of TDS cannot be made, which is a serious default under the Income Tax Act.
What is GSTIN (Goods and Services Tax Identification Number)?
GSTIN is Goods and Services Tax Identification Number. It is an alphanumeric 15-digit code granted by the Goods and Services Tax Network (GSTN) to GST-registered businesses.
Purpose of GSTIN
GSTIN is utilized for tracing the supply of goods and services, tax collection, claim of input credit, and GST return filing.
Who Needs GSTIN?
- Businesses with turnover above the specified GST threshold (presently Rs 40 lakh for goods, Rs 20 lakh for services)
- E-commerce vendors
- Interstate suppliers
- Voluntary registrants and input service providers
Where GSTIN Is Applied
- Issuing tax invoices
- Filing GSTR-1, GSTR-3B, and other GST returns
- Claiming input tax credit (ITC)
- Collecting and remitting GST to the government
- B2B compliance and vendor verification
It’s compulsory to place your GSTIN on invoices, business signboards, and websites (if any).
Key Differences: PAN vs TAN vs GSTIN
Even though all three are tax-related identification numbers issued by the government as part of mandatory compliance, all three have significantly different purposes. Below is an in-depth comparison to make the difference more explicit –
| Feature | PAN (Permanent Account Number) | TAN (Tax Deduction and Collection Account Number) | GSTIN (Goods and Services Tax Identification Number) |
| Purpose | Acts as a universal ID for income tax, used to track financial transactions and tax returns. | Used specifically for TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) compliance. | Used to manage GST compliance, tax collection, and filing for businesses. |
| Issued By | Income Tax Department (Central Board of Direct Taxes) | Income Tax Department (CBDT) | GST Network (GSTN) under the Central Board of Indirect Taxes and Customs (CBIC) |
| Format | 10-character alphanumeric code (e.g., ABCDE1234F) | 10-character alphanumeric code (e.g., MUMT12345E) | 15-digit alphanumeric code (e.g., 27ABCDE1234F1Z5) |
| Who Needs It | Individuals, salaried employees, freelancers, businesses, companies — basically everyone earning taxable income. | Only entities or employers who deduct or collect tax on behalf of the government. | Businesses and service providers registered under GST laws (above the turnover limit). |
| Primary Use Case | Filing ITR, opening bank accounts, high-value investments, property transactions, and financial identification. | Mandatory for filing TDS/TCS returns, issuing TDS certificates, and depositing TDS with the government. | Used on GST invoices while filing GST returns, claiming input tax credit (ITC). |
| Legal Requirement | Mandatory for almost all financial transactions above a limit (e.g., buying property, opening Demat accounts). | Mandatory for any person or organization deducting TDS, failing which penalties apply. | Mandatory for businesses with a turnover above the GST threshold or involved in interstate trade. |
| Linkage with Other IDs | Acts as the base ID; both TAN and GSTIN are linked to PAN. | Issued separately but linked to PAN for TDS compliance. | GSTIN is generated using PAN as part of the registration process. |
Do You Need All Three?
It varies according to the character of your activities –
- A salaried person would typically require only a PAN.
- A business or employer would typically require PAN + TAN.
- A trader or service provider registered under GST requires PAN + GSTIN, and if deducting TDS, also TAN.
They cater different compliance requirements and generally inter-related. For instance, your GSTIN is based on your PAN, and TAN is required for filing TDS returns, which are inter-related to PAN.
Conclusion
Although PAN, TAN, and GSTIN look similar as government-assigned identification numbers, each has a specific and non-overlapping application in Indian taxation. PAN is the widest, applied to all financial operations. TAN is applied specifically for tax collection or deduction. GSTIN, on the other hand, oversees indirect tax compliance under the GST regime for businesses.
Knowing the differences among these figures guarantees correct compliance, effortless business operations, and prevents expensive mistakes while filing taxes or being audited. If you have a business or handle payroll, you probably will need to use all three and having an awareness of when and why each is necessary is the beginning of doing it correctly.
