What is PAN (Permanent Account Number)?
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Definition: PAN is a 10-character alphanumeric code issued by the Income Tax Department of India. It is used to identify individuals, businesses, or other entities conducting financial transactions.
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Purpose:
- Tracks financial transactions to prevent tax evasion.
- Mandatory for filing income tax returns, opening bank accounts, and high-value transactions.
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Who Needs PAN:
- Individuals.
- Businesses or firms.
- Trusts and partnerships.
- Foreign nationals earning income in India.
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Format:
Example: ABCDE1234F- The first five characters are letters, followed by four numbers, and one letter at the end.
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Common Uses:
- Filing income tax returns.
- Opening bank accounts.
- Purchasing property, vehicles, or mutual funds.
- Receiving payments above certain limits.
What is TAN (Tax Deduction and Collection Account Number)?
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Definition: TAN is a 10-character alphanumeric code issued by the Income Tax Department. It is required by entities responsible for deducting or collecting taxes at the source.
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Purpose:
- To track TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) transactions.
- Ensure compliance with TDS/TCS provisions under the Income Tax Act.
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Who Needs TAN:
- Employers deducting TDS from employee salaries.
- Businesses collecting or deducting taxes on payments.
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Format:
Example: ABCDE1234F- Similar to PAN, it has five letters, four numbers, and one letter.
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Common Uses:
- Deduction or collection of taxes.
- Filing TDS/TCS returns.
- Issuing TDS certificates to deductees.
Differences Between TAN and PAN:
| Aspect | PAN | TAN |
|---|---|---|
| Full Form | Permanent Account Number | Tax Deduction and Collection Account Number |
| Purpose | Tracks financial transactions | Tracks TDS/TCS transactions |
| Applicable To | Individuals and entities | Entities deducting/collecting taxes |
| Format | ABCDE1234F | ABCDE1234F |
| Mandatory For | Filing income tax returns | Deducting/collecting tax |
How to Apply for PAN and TAN:
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Online Application:
- Visit the NSDL or UTIITSL website for PAN.
- Visit the TIN NSDL website for TAN.
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Documents Required:
- For PAN: Identity proof, address proof, date of birth proof (for individuals).
- For TAN: Business registration proof, identity proof of the applicant.
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Processing Time:
Usually, it takes 7–15 working days for the issuance of PAN or TAN after application submission.
Important Notes:
- PAN is unique for each individual/entity and is valid for a lifetime.
- TAN is mandatory only for entities deducting/collecting taxes and is also unique.