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Posted on November 27, 2021
What are PAN and TAN?
PAN or Permanent Account Number
PAN stands for Permanent Account Number and is assigned to all tax payers in India as it serves as a unique identification number. It is a single number and is an electronic system which holds all the tax related information’sfor a company or an individual ta payer. It stores all the information pertaining to the tax payer and act as a primary key, which can be shared all over the country with various required authorities.
There cannot be more than 1 assessee holding one Pan as it is unique for each of the assessee and assigned in such manner that there is no repetition or duplication.
PAN Card can be issued to any company, individual, NRI (Non-Resident Indians), companies or assessee who is liable to pay tax in India.
Structure of a PAN Card
PAN Card stores information with respect to one’s identity, age proof and it helps in getting compliance related with know your customer guidelines. Details which are included in PAN Card are as follows:
- Cardholders Name, whether it is an Individual, company, firm or such other assessee.
- Cardholders Fathers Name, which shall be applicable in case of an individual.
- Date of Birth in case of an Individual and date of incorporation or registration as in case of other assesse’s.
- PAN which is the unique number assigned to the assessee. It is nothing but a 10-letter alphanumerical number. In this each of these 10 letters represents clear information pertaining to the card holder. The same has been explained below:
Take an example of AYDPC0123P
- First three letters are purely alphabetical and will be random letters from within A-Z.
- The fourth letter is representing the classification of the taxpayer which are again as below:
- A – Association of Persons.
- B – Body of Individuals.
- C – Company.
- F – Firms.
- G – Government.
- H – Hindu Undivided Family.
- L – Local Authority.
- J – Artificial Judicial Person.
- P – Individual.
- T – Association of person or trust.
- The fifth letter is representing the initial of the cardholder which is an individual’s surname.
- While the remaining letters are randomly based, where first four are random number while the last one is an alphabet.
- Signature shall be present on an Individuals PAN Card, which might also be needed in some of the financial transactions in which such individual shall be involved.
- Photograph shall also be present in case of an individual as an identity proof and this shall not be present in case of company or firm or such other assessee.
TAN or Tax Deduction Account Number
TAN stands for Tax Deduction Account Number and it is issued by the Income Tax Department under the Central Government. It is a 10-digitalphanumerical number and is issued to every person who is liable to deduct TCS (tax Collected at Source) or TDS (Tax Deducted at Source). This is a unique number and as per section 203A of the Income Tax Act, the TAN number shall have to be written on every TDS return filed by the assessee.
TAN can be issued to an individual, company, firm or such other assessee who is liable to deduct or collect TDS and TCS.
Structure of TAN
Here there will be many details which are encoded by using combination of letters as well as numbers and the details of the same are given below:
Take an example of TAN as ZDEP01011E
- The first three alphabets of TAN represent the jurisdiction code of the holder.
- The fourth letter is the initial of name of the holder.
- The fifth letter is single identifying number and this does not have any significance added.
- And the last letter is alphabet and it is a unique identifying entity.
Difference between PAN and TAN
There are some major differences between PAN and TAN, and some of them are discussed below:
- PAN is basically required by every tax payer but in case of TAN, the same shall be taken by individuals or assessee who are paying or collecting TCS or TDS.
- The governing law of PAN is the section 139 of the Income Tax Act while in case of TAN it is section 203A of the Income Tax Act.
- The primary purpose of owning a PAN is that it acts as all-in-one code and it gives permission for all financial transactions. While TAN makes the TDS collection and remittance procedure easier and simpler.
- The forms which are necessary in case of PAN are as follows:
– In case of a citizen of India – Form 49A shall apply.
– In case of others or foreigners – Form 49AA shall apply.
While the necessary form in case of TAN is form 49B.
It should also be noted that there are certain similarities in case of PAN and TAN amongst which the major ones are listed below:
- The maximum number of PAN and TAN which can be held by an assessee shall be limited to one.
- Both of them are issued by the Income Tax Department of India.
- The identifying code of PAN and TAN are 10-digit alphanumerical code.