Difference Between PAN Card and TAN Number

Introduction

An individual must understand the key differences between Tax Account Deduction Number (TAN) and Permanent Account Number (PAN) Card before starting a business. Any business owner should be very familiar with these three-letter terms because they will help you understand the compliance requirements when starting a company in India or engaging in any financial activity to making money from it. So in this article, we will learn the difference between a PAN Card and a TAN Number in India.

What is the TAN Number?

Tax Deducted Account Number or a TAN, is an important consideration in setting up a business and hiring employees. The TAN is a number provided to employers or individuals who must subtract taxes from business payments in accordance with the Income Tax Act. A business that deducts taxes at source (TDS) and does not have a valid TAN will be subject to legal penalties. It is the duty of a company to file TDS returns on a quarterly basis after obtaining a TAN.

What is a PAN Card?

Every Indian taxpayer can only be recognized by their ten-digit PAN (Permanent Account Number) Card, which is an alphanumeric code. This number applies to everyone in India, including individuals, foreigners, businesses, trust, and Hindu Undivided Families. It is an essential document that serves as proof of identity and is given by the IT Department of India. A valid PAN Card is a mandatory document for anyone wanting to start their own business. This card is also used by the IT Department to monitor all financial transactions, including the taxable component of those transactions. In addition, large bank transactions, credit applications, and the purchase of real estate all require this PAN Card these days.

What is the importance of PAN Card?

• The PAN card is an essential requirement when applying for credit cards and opening bank accounts.
• It also helps to prevent tax deductions at a higher percentage than dues.
• A person can open a DEMAT account for security sales and buy using their PAN card.
• One of the requirements for establishing a business in India is obtaining a PAN.
• The PAN card is forever valid.

What are the differences between a PAN Card and a TAN Number?

Let’s distinguish between the PAN card and TAN number on the basis of the following factors or aspects:

1. Issued to whom: A TAN is a 10-digit code assigned to any individual who is in charge of tax collection or deduction at source. PAN is a 10-digit number granted to those who need to transfer money over a certain limit. It is obtained by registering with the IT Department.
2. Requirement: The TAN requirements apply to the individual who is responsible for withholding tax from money paid or recoverable under the IT Act. PAN is essential for individuals when filing their income tax returns.
3. Form to be filed: In the case of TAN, the 49B form must be filed, whereas in the case of PAN, the 49A form must be filled out for Indians and the 49AA form for foreigners.’
4. Law applicable: Section 139A of the Income Tax Act is applicable for PAN registration, while Section 203A of the Income Tax Act is applicable for TAN registration.
5. Application process: The taxpayer must provide paperwork, including evidence of identification, proof of address, proof of date of birth, and photos, in order to apply for a PAN number. Taxpayers only need to provide a signed acknowledgment online to apply for a PAN.
6. Performed by: PAN number is required to transfer any kind of money. TAN indicated in the event that a taxpayer discloses the true amount of TDS.

Summary

Whether you file taxes as an individual or as a business, you must have the required paperwork for your application to be accepted. Learning the TAN and PAN can help you file your taxes correctly and keep you safe from any costly penalties. Being familiar with these terms is essential since it saves time when signing agreements or contracts with other parties.