What is the Difference Between PAN and TAN?
🆚 Go to Comparative Table 🆚The main difference between PAN and TAN lies in their purpose and the entities they are associated with. Here are the key differences between the two:
- PAN (Permanent Account Number): PAN is a 10-digit unique alphanumeric number issued by the Income Tax Department. It is allotted to taxpayers and is mandatory for financial transactions such as opening bank accounts, filing tax returns, and other financial transactions. PAN is also used as proof of identity for Indian citizens. It is permanent and does not expire.
- TAN (Tax Deduction and Collection Account Number): TAN is a 10-digit alphanumeric number issued by the Income Tax Department. It is allocated to tax-deductors and is used for the purpose of deducting or collecting tax. TAN is mandatory for individuals and entities who are required to deduct or collect tax at the source, such as employers, banks, and other financial institutions. It is valid for one financial year and needs to be renewed annually.
In summary, PAN is a unique identification number for individuals and entities, while TAN is a unique number for tax-deductors and collectors. PAN is required for various financial transactions, whereas TAN is mandatory for tax-related transactions such as filing TDS/TCS returns and other tax-related activities.
Comparative Table: PAN vs TAN
PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) are both issued by the Income Tax Department, but they serve different purposes and cannot be used interchangeably. Here is a table highlighting the differences between PAN and TAN:
| Feature | PAN | TAN |
|---|---|---|
| Meaning | PAN is a ten-digit alphanumeric code allotted to individuals or entities involved in taxable transactions. | TAN is a ten-digit alphanumeric code assigned to persons or entities responsible for deducting or collecting tax at the source. |
| Purpose | PAN is used to link various documents related to the assessment, payment, and arrears of taxes of the assessee, ensuring easy access to information and helping in widening the tax base and reducing tax evasion. | TAN is required for persons or entities responsible for deducting or collecting tax at source, and it must be quoted in TDS/TCS returns. |
| Mandatory | It is mandatory to quote PAN in transactions like opening a bank account, dealing in securities, and filing Income Tax Returns. | It is mandatory to obtain TAN for persons or entities responsible for deducting or collecting tax at source. |
| Structure | PAN is a unique 10-digit alphanumeric number. | TAN is a unique 10-digit alphanumeric number, with the structure encoding various details, such as the jurisdiction code and the name of the owner. |
Remember that PAN and TAN are both essential for tax-related transactions and compliance, but they serve different functions and cannot be used in place of one another.