Know about the Finance and Investments Terms

In an attempt to monitor or survey the collection of taxes from diverse sources of income, the Income Tax Department of India issues distinct types of unique identification systems. Two such prominent systems are PAN and TAN number.

However, these two systems of tax collection surveillance come with their own set of differences -

• Definition 

PAN: Permanent Account Number or PAN is issued by the Income Tax department and is a 10-digit alpha-numeric ID number issued under Section 139A of Income Tax Act 1961. It helps the IT department to identify and quote all transactions of a tax assessee.

TAN: TAN number full form is Tax Deduction and Collection Account Number. It is a 10-digit alpha-numeric code that is a mandate for employees who need to deduct TDS or TCS under Section 192.

• Application process

PAN: Applicants will need to submit Form 49A or Form 49AA (foreigner applying for PAN in India)

TAN: Applicants, to fill in the TAN application form can opt for either online or offline modes. To apply for TAN, individuals will need to submit Form 49B and avail their TAN number. 

• Features 

PAN: This number has to be quoted while submitting and preparing income tax returns, and filing and calculating Advance Tax.

TAN: Knowing what is TAN and availing the number is ideally essential while dealing with entities, or individuals who are involved in tax deduction at source. It helps streamline the collection and deduction of taxes.

Despite their differences, both these documents are an essential inclusion in case of IT, TDS, TCS filing. Additionally, such paperwork is also a mandate to avail financial assistance for the smooth functioning of their trade in the form of business loans.

Thus, make sure to know your TAN and PAN number before approaching a lender to avail financial assistance for the smooth functioning of your trade.