An individual must understand the key differences between Tax Account
Deduction Number (TAN) and Permanent Account Number (PAN) Card before starting a
business. Any business owner should be very familiar with these three-letter
terms because they will help you understand the compliance requirements when
starting a company in India or engaging in any financial activity to making
money from it. So in this blog, we will learn the difference between a PAN Card
and a TAN Number in India.
What is the TAN Number?
Tax Deducted Account Number or a TAN, is an important consideration in setting
up a business and hiring employees. The TAN is a number provided to employers or
individuals who must subtract taxes from business payments in accordance with
the Income Tax Act. A business that deducts taxes at source (TDS) and does not
have a valid TAN will be subject to legal penalties. It is the duty of a company
to file TDS returns on a quarterly basis after obtaining a TAN.
What is a PAN Card?
Every Indian taxpayer can only be recognized by their ten-digit PAN (Permanent
Account Number) Card, which is an alphanumeric code. This number applies to
everyone in India, including individuals, foreigners, businesses, trust, and
Hindu Undivided Families. It is an essential document that serves as proof of
identity and is given by the IT Department of India. A valid PAN Card is a
mandatory document for anyone wanting to start their own business. This card is
also used by the IT Department to monitor all financial transactions, including
the taxable component of those transactions. In addition, large bank
transactions, credit applications, and the purchase of real estate all require
this PAN Card these days.
What is the importance of PAN Card?
The PAN card is an essential requirement when applying for credit cards and
opening bank accounts.
It also helps to prevent tax deductions at a higher percentage than dues.
A person can open a DEMAT account for security sales and buy using their PAN
card.
One of the requirements for establishing a business in India is obtaining a PAN.
The PAN card is forever valid.
What are the differences between a PAN Card and a TAN Number?
Let's distinguish between the PAN card and TAN number on the basis of the
following factors or aspects:
Issued to whom: A TAN is a 10-digit code assigned to any individual who is in
charge of tax collection or deduction at source. PAN is a 10-digit number
granted to those who need to transfer money over a certain limit. It is obtained
by registering with the IT Department.
Requirement: The TAN requirements apply to the individual who is responsible for
withholding tax from money paid or recoverable under the IT Act. PAN is
essential for individuals when filing their income tax returns.
Form to be filed: In the case of TAN, the 49B form must be filed, whereas in the
case of PAN, the 49A form must be filled out for Indians and the 49AA form for
foreigners.
Law applicable: Section 139A of the Income Tax Act is applicable for PAN
registration, while Section 203A of the Income Tax Act is applicable for TAN
registration.
Application process: The taxpayer must provide paperwork, including evidence of
identification, proof of address, proof of date of birth, and photos, in order
to apply for a PAN number. Taxpayers only need to provide a signed
acknowledgment online to apply for a PAN.
Performed by: PAN number is required to transfer any kind of money. TAN
indicated in the event that a taxpayer discloses the true amount of TDS.
If you want to start a business in India, you need to know how to incorporate a
company in India. This article will help you with the online process of company
registration, the types of business entities, and the benefits of incorporation.
You will also learn about the documents, fees, and compliances involved.
Summary:
Whether you file taxes as an individual or as a business, you must have the
required paperwork for your application to be accepted. Learning the TAN and PAN
can help you file your taxes correctly and keep you safe from any costly
penalties. Being familiar with these terms is essential since it saves time when
signing agreements or contracts with other parties.
Get in touch with our experts today!
Email:
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Website: www.ebizfiling.com
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