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What is the Process of Obtaining PAN & TAN for Registered Sole Proprietorship Firm?

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Sole Proprietorship Firm

A single individual owns a business form known as a sole proprietorship. The owner has total control over the business and is responsible for all financial responsibilities, making it the most basic type of business structure. A sole proprietorship shares its owner’s legal identity and does not have a separate one.

Importance of a PAN and TAN

A registered sole proprietorship firm requires a Permanent Account Number (PAN) and a Tax Deduction and Collection Account Number (TAN). The Income Tax Department issues PANs, which are utilized for various tax-related activities, including filing returns, conducting financial transactions, and obtaining loans. On the other hand, TAN is necessary for withholding and remitting taxes on behalf of contractors or employees. 

Key Takeaways

  1. A sole proprietorship is a basic business structure owned and controlled by a single individual.
  2. PAN and TAN are essential for registered sole proprietorship firms.
  3. PAN is a unique identification number for tax-related activities and financial transactions.
  4. TAN is required for withholding and remitting taxes on behalf of contractors or employees.
  5. Both PAN and TAN can be obtained online through NSDL or UTIITSL websites.
  6. Documents like proof of identification, address, and company registration are needed for the PAN application.
  7. TAN is necessary for entities withholding tax, including employers and various organizations.
  8. Ensure accurate information, complete documentation, and timely payment to avoid application errors.
  9. Monitor the application status and promptly respond to inquiries for a smooth process.
  10. Processing times for PAN and TAN applications may vary, typically taking a few days to weeks.

What is PAN?

The Income Tax Department of India issues a Permanent Account Number (PAN), a special identification number, to people, companies, and other entities. It functions as a universal identification key for various financial transactions and tax-related purposes.

Any person or organization, including a legally established sole proprietorship firm, may apply for a PAN. Both Indian residents and non-residents are eligible to apply for a PAN, and there are no specific requirements for doing so.

A registered sole proprietorship firm must provide specific documentation to apply for a PAN. These normally contain the proprietor’s evidence of identification, proof of address, and proof of company registration.

You can apply for a PAN online at the National Securities Depository Limited (NSDL) or the UTI Infrastructure Technology and Services Limited (UTIITSL) website. The required documents must be submitted, and the application form must be completed. UPON VERIFICATION, the PAN card will be issued and sent to the registered address.

What is TAN?

The Income Tax Department of India has assigned Tax Deduction and Collection Account Numbers (TAN), a special ten-digit alphanumeric identification, to the organizations in charge of withholding or collecting tax at the source. It functions as a tracking and reporting code for tax deducted at source (TDS), a deduction made by employers or other organizations when they make payments subject to TDS regulations.

The TAN number is necessary for submitting TDS returns, issuing TDS certificates, and meeting the requirements for tax withholding. This promotes accountability and transparency in the tax collection process by assisting the Income Tax Department in tracking and monitoring the TDS payments made by the deductor.

Eligibility Criteria

An application for a Tax Deduction and Collection Account Number (TAN) can be made by any organization or person in charge of withholding or collecting tax at the source. Some of the entities that need a TAN include the following:

  • Employers must get a TAN if they withhold tax from their employees’ salaries at the source.
  • Entities that make transactions subject to tax deduction at source, such as registered sole proprietorship firms, partnerships, limited liability partnerships (LLPs), private companies, trusts, and societies, must have a TAN.
  • Departments or organizations within the government that send out payments subject to TDS must also get a TAN.

It is important to remember that an entity must apply for a TAN before making any payments that require the deduction or collection of tax at source. Penalties or legal repercussions may follow failure to obtain a TAN.

The obligation of the entity to withhold or collect tax at source by the Income Tax Act, 1961 provisions forms the basis of the qualifying requirements for obtaining a TAN.

Documents Required

Typically, the following documents are needed to apply for a Tax Deduction and Collection Account Number (TAN):

  • Identity Proof: The applicant must submit identification, which may be demonstrated by any official document bearing their photo, such as a passport, voter ID card, PAN card, or Aadhaar card.
  • Address Proof: An official document proving the applicant’s address must be presented. This can be a bank statement, utility bill, passport, or driver’s license.
  • Documents such as the registration certificate, partnership deed, certificate of incorporation, or trust deed may be needed to prove the existence of entities such as registered sole proprietorship firms, partnerships, LLPs, companies, trusts, or societies.

Application Process for TAN:

Online applications for TANs can be submitted via the websites of UTI Infrastructure Technology and Services Limited (UTIITSL) or the National Securities Depository Limited (NSDL). Usually, the process includes the following steps:

  • Fill out the Application Form: The Applicant must include complete and accurate personal, entity, and address information in the online application form.
  • Fees: The required TAN application fee must be paid online during the application procedure.
  • Upload Documents: The applicant must upload all required documents, including identification, address, and entity (where appropriate) proof.
  • Application submission: The application can be made online after verifying the necessary information and documentation.

The relevant authorities will process the application after it is filed. The TAN number will be given and notified to the applicant following successful verification.

How to Apply for a PAN & TAN for a Sole Proprietorship Firm?

PAN Application:

The methods listed below can be used to apply for a PAN (Permanent Account Number) for a sole proprietorship firm:

  • You should visit the UTI Infrastructure Technology and Services Limited (UTIITSL) or the National Securities Depository Limited (NSDL) websites.
  • Provide accurate information on the PAN application form online, including your name, address, and type of business.
  • Upload the required documents, including identification, address, and sole proprietorship registration proof.
  • Online payment of the PAN application fee.
  • Send the application form and supporting documentation to be processed.
  • UPON SUCCESSFUL VERIFICATION, the PAN card will be issued and forwarded to the registered address.

TAN Application:

  • Visit the NSDL or UTIITSL website to apply for a TAN.
  • Complete the online TAN application form by entering information about the single proprietorship company, such as name, address, and contact details.
  • Upload the necessary paperwork, including identification, address, and firm registration verification.
  • Online-pay the required TAN application fee.
  • Send the application form and supporting documentation to be processed.
  • The applicant will receive the TAN number when the application has been reviewed and accepted.

A sole proprietorship firm can successfully apply for PAN and TAN by following these steps, providing accurate information, and submitting all required papers. This will allow them to complete their tax compliance duties and conduct business activities effectively.

Common Mistakes to Avoid

It’s crucial to avoid the following typical errors when submitting PAN and TAN applications for a sole proprietorship firm:

  • Giving Incorrect Information: Ensure all the information you include on your application forms is true and matches the supporting records. Name, address, and other information errors may cause delays or application rejection.
  • Inadequate Documentation: Ensure that you submit all the necessary paperwork as listed on the application forms. The application may be rejected as a result of missing or incomplete documents.
  • Non-compliance with Instructions: When completing the application forms and uploading documents, adhere to the instructions from the relevant authorities, such as NSDL or UTIITSL. The application may become complicated or be rejected if the criteria are not followed.
  • Problems with payments: Ensure that the PAN and TAN application fees are paid accurately and on time. Any payment inconsistencies could delay or prevent the application from being processed.
  • A lack of Follow-up: Monitor the status of your application and any correspondence you receive from the authorities. Prompt responses to any questions or requests for additional information are essential to prevent delays in the application process.

To maximize their chances of a smooth and successful PAN and TAN application process for their single proprietorship firm, applicants should avoid these typical mistakes and carefully follow the instructions.

Timelines

The application dates must be considered while submitting PAN and TAN applications for a sole proprietorship firm. Various elements, including the authorities’ effectiveness and the application’s thoroughness, can affect the deadlines. You should be familiar with the following timelines in general:

Application of PAN:

  • Online PAN application submission is possible; the procedure usually takes a few minutes to complete.
  • Depending on the workload of the authorities, processing a PAN application could take a few days to a few weeks.
  • The PAN card is typically sent out within a few weeks after the application has been reviewed and accepted. Depending on the mail service, delivery times may change.

Application of TAN:

  • The TAN application can also be submitted online, and the procedure usually takes a few minutes to complete.
  • Depending on several variables, the processing time for the TAN application may take a few days to a few weeks.
  • The applicant will typically receive their TAN number within a few weeks of their application being processed and approved.

Conclusion

We at Kanakkupillai know how crucial PAN and TAN registration is for sole proprietorship firms. We provide complete application support to ensure our clients’ experiences are easy and hassle-free. Our experts walk firms through each step, from completing the application forms to submitting the necessary paperwork. Businesses may depend on our knowledge and individualized help by working with Kanakkupillai to ensure proper and fast PAN and TAN registration. We make it easy for businesses to comply with tax requirements and confidently concentrate on their primary business operations. Put your trust in Kanakkupillai for your PAN and TAN conditions to enjoy smooth sole proprietorship firm registration services.

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