To accumulate & manage tax collection from different incomes, the IT department issues some identification numbers, i.e., PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) of entities such as individuals, firms, and other organizations.
A permanent account number is a unique number for someone who pays income taxes or does any business transactions. TAN is for any organization that deducts tax at the origin. A TIN is required by a trader who is expected to or does pay VAT.
GSTIN (Goods & services tax identification number) is the new form of TIN after the implementation of GST.
These credentials are necessary to do the business of any kind. So let’s see the Basic difference between these three.
1. PAN (Permanent Account Number)
A PAN is for anyone who is liable to pay taxes and does financial transactions comes under IT act. It may include TDS payments, taxes, specific transactions, etc. PAN is mandatory now for transactions more than 50k.
It is the identification number for the individual to the IT department. It is necessary for payment of tax, tax demand, loans, assessment, or anything related to it. So everyone having some income source needs permanent account number card.
Let us take an example of a typical PAN format:
Here, three initial letters (AFJ) are alphabetic series from A to Z.
The fourth letter represents holder of the PAN. “P” is individual, “c” for the company, “F” is firm, “T” is trust and “A” is AOP, etc.
The fifth character is the first word of the surname of the PAN Holder. “J” in above case.
Next Four number are alphabetic series from 0000 to 9999.
Last character “K” is alphabetic check digit for PAN.
2. TAN (Tax Deduction and Collection Account Number)
TAN is for any organizations that collect taxes at the source (TCS) or deduct tax at the source (TDS). It may be a company or any bank that deducts TDS from its employees. They all need to mention their TAN at the TDS or TCS records, annual returns or any other related documents. This
This company may also be paying its taxes or involve in some financial transaction. So it also requires attaining permanent account number. But everyone has a PAN does not need TAN.
Let us take an example of a typical TAN format:
3. TIN (Taxpayer Identification Number)
TIN is mandatory for all traders who do pay VAT. It includes Manufacturers, exporters, shopkeepers, wholesalers or online dealers, etc. It helps the trader to keep its record of all VAT payments in one account hence make things simple.
TIN was introduced to make things easy by IT department and to modernize the current system using information technology. It allows a trader to pay VAT or other taxes in one state and automatically intimate when it is time to pay in another state. So it is helpful in streamlining the whole process. That’s why TIN is also known as CST number/VAT number/or Sale tax number.
First two are regulated by Income tax department whereas TIN is controlled by Commercial tax department of India.
4. GSTIN (Goods and Services Tax Identification Number)
Before GST, When you purchase goods, trader used to give you bill in which TIN was mentioned. TIN was necessary for all. Now, after GST implementation, GSTIN has taken the place of a TIN number. So this GSTIN is the substitute for TIN of VAT age.
It is a 15 digit alphanumeric code given to each taxpayer in the country. It is state-wise and based on PAN number.
Let us take an example of GSTIN to understand its format:
Consumers may check and make sure that the GSTIN given in bill by the trader is exactly the form given above. Some dealer may put some random numbers and charge you GST. Hence always keep a check.
Comparison of PAN, TAN, TIN and GSTIN numbers:
Use: PAN and TAN are for income tax whereas TIN is for VAT or sales tax. GSTIN is for GST.
Issuing authority: PAN and TAN by IT department and TIN by Commercial tax department of India. GSTIN is issued by CBEC.
Number: PAN and TAN are ten digit alphanumeric codes whereas TIN is 11 digit where first two digit represents state codes. GUSTIN is 15 digit alphanumeric number which also contains PAN in it.
Purpose:PAN is a universal number for all business transactions; TAN is an account to streamline TDS and TCS. TIN is a system to track all VAT/sale tax related activities in the country under one account. GSTIN is the replacement of TIN, and it includes all other identification numbers under a single umbrella for GST regime.
PAN:Fine of Rs.10k for negligence to comply with the terms.
TAN: Not apply for TAN or not citing the TAN in the defined documents brings a penalty of Rs. 10K.
TIN: Its penalty provisions Differs from state to state.
GSTIN: It’s up to 25k, but it also varies from state to state.