Pradeep Gaur/Mint
Pradeep Gaur/Mint

Did you know? The differences between your PAN and TAN

While the assessees have to take the initiative in getting these issued, in many cases the PAN and TAN identities are mandatory

In order to collect and manage tax collection from various incomes, the income tax department issues various unique identification numbers, such as Permanent Account Number (PAN) and Tax Deduction and Collection Account Number (TAN) to entities such as individuals, companies and trusts.

While the assessees have to take the initiative in getting these issued, in many cases the PAN and TAN identities are mandatory. Read on to when they are required and what purpose they serve.

PAN

It is a 10-digit alphanumeric identity number, issued under section 139A of Income-tax Act, 1961, by the income tax department. It enables the department to identify all the transactions of a tax assessee, such as: tax payment, tax returns, and specified transaction where PAN has to be quoted. It is essential for every individual to have a PAN, if the income earned during the year is taxable, which means: Rs2.5 lakh or more for individuals below the age of 60 years, or more than Rs3 lakh for senior citizens (above 60 years of age) and Rs5 lakh or more for very senior citizens (above 80 years of age).

Besides that, any individual who is entitled to receive any income, after deduction of tax at source or who is liable to pay excise duty and so on, needs to have a PAN. Apart from that, for various cash transactions too, one has to furnish PAN or Form No. 60 if PAN is not available. In a recent move, the Central Board of Direct Taxes (CBDT) has made it mandatory for all account holders in banks and post offices to provide PAN or Form No. 60.

Once obtained, PAN is valid throughout India and for the lifetime of the assessee.

The PAN identity does not change even if the change involves address of the assessee or the assessing officer.

However, any change in the details that were provided at the time of applying for the PAN, such as address, should be intimated to the department by furnishing the details in the form for ’Request For New PAN Card Or/ And Changes or Correction in PAN Data’.

TAN

Similar to PAN, TAN is also a 10-digit alpha numeric identity. However, only those who are responsible for deducting or collecting tax need to get a TAN.

For instance, an employer who needs to deduct tax at source from employees’ income under section 192 of the Act, needs to have a TAN. Under section 203A of the Act, it is mandatory to quote TAN on all tax deducted at source (TDS) returns.

If it is not quoted, TDS or tax collected at source (TCS) returns will not be accepted by Tax Information Network-Facilitation Centres (TIN-FCs) and the challans for TDS or TCS payments will not be accepted by banks.

Failure to apply for TAN, or not quoting it in the specified documents, attracts a penalty of Rs10,000.

Also, according to the income tax rules, a property buyer has to deduct TDS at the rate of 1% of the property value if property value is above 50 lakh. In such cases, the property buyer does not have to acquire a TAN to do so. Instead, she can mention her PAN while deducting and filing the TDS return.

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