1. Permanent Account Number (PAN)

• A unique 10-digit alphanumeric identification number issued by the Income Tax Department of India.
• It serves as a primary identifier for all financial transactions and tax-related activities.
• Permanent: Once issued, a PAN remains valid for the lifetime of the holder.
• Mandatory: It is mandatory for most financial transactions exceeding a certain limit, including opening bank accounts, investing, property transactions, and filing income tax returns.

2. Tax Deduction and Collection Account Number (TAN)

• A unique 10-digit alphanumeric number required by all persons who are liable to deduct or collect tax at source (TDS or TCS) as per the Income Tax Act, 1961.
• It is specifically used for TDS/TCS related compliance, such as depositing deducted/collected tax, filing TDS/TCS returns, and issuing TDS/TCS certificates.

Separate from PAN: While you need a PAN to apply for TAN, they are distinct numbers serving different purposes.

Obtaining PAN and TAN (if applicable) is non-negotiable for several reasons:

Importance of PAN:

1. Mandatory for Income Tax Returns: Without a PAN, you cannot file your Income Tax Return in India, irrespective of your income source.
2. Essential for Financial Transactions: PAN is compulsory for:
   • Opening a bank account (savings, current, fixed deposits).
   • Applying for loans or credit cards.
   • Buying or selling immovable property.
   • Investing in mutual funds, shares, or bonds.
   • Depositing cash exceeding ₹50,000 in a bank account.
   • Any high-value transactions as specified by the Income Tax Department.
3. Proof of Identity: It serves as a valid and widely accepted photo identity proof, often used for KYC (Know Your Customer) verification.
4. Tax Compliance & Transparency: It helps the Income Tax Department track all financial transactions associated with an individual or entity, promoting transparency and combating tax evasion.
5. Avoiding Higher TDS/TCS: If you don't provide your PAN for certain transactions (e.g., interest income, professional fees), a higher rate of TDS/TCS may be deducted.

Importance of TAN:

1. Legal Obligation for Deductors/Collectors: It is legally mandatory for any person or entity required to deduct TDS or collect TCS under the Income Tax Act. Failure to obtain TAN when required can lead to significant penalties.
2. Facilitates TDS/TCS Compliance: All activities related to TDS/TCS – including depositing the tax deducted/collected, filing quarterly TDS/TCS returns, and issuing TDS/TCS certificates (Form 16/16A/27D) – require a valid TAN.
3. Ensures Proper Credit to Deductees: Without a TAN, the tax deducted from your payees/suppliers cannot be correctly deposited with the government, and the deductees may not receive proper tax credit when filing their own returns.
4. Audits & Scrutiny: Proper TAN compliance helps businesses maintain accurate records, which is crucial during tax audits and scrutiny by the Income Tax Department.

Applicability of PAN:

• Individuals: All resident and non-resident individuals who have taxable income in India.
• Hindu Undivided Families (HUFs): If their total income exceeds the basic exemption limit.
• Companies: All Private Limited Companies, Public Limited Companies, One Person Companies, and Section 8 Companies.
• Partnership Firms & Limited Liability Partnerships (LLPs):
• Trusts, Societies, and Associations of Persons (AOPs) / Body of Individuals (BOIs):
• Any person (including minors) entering into specified financial transactions requiring PAN.

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• All persons who are responsible for deducting Tax at Source (TDS) under the Income Tax Act. This includes:
  • Employers: For deducting TDS from employee salaries.
  • Businesses/Organizations: For deducting TDS on payments like professional fees, rent, commission, contract payments, interest, etc.
  • Government Organizations:
  • Individuals/HUF if they are carrying out a business or profession whose total sales/gross receipts/turnover exceeds ₹1 Crore (for business) or ₹50 Lakhs (for profession) in the preceding financial year, and they are making payments subject to TDS.
• All persons who are responsible for collecting Tax at Source (TCS) under the Income Tax Act (e.g., sellers of specified goods like scrap, minerals, etc., or motor vehicles above ₹10 Lakhs).

• The application form for PAN for Indian Citizens/Entities is Form 49A. For Foreign Citizens/Entities, it's Form 49AA. For TAN, it's Form 49B.

  A. PAN Application Requirements:

  1. For Indian Citizens (Individuals & HUFs):
  • Proof of Identity (any one):
    • Aadhaar Card (most common for individuals)
    • Voter ID Card
    • Driving License
    • Passport
    • Ration Card with photograph
    • Photo identity card issued by Central/State Government/PSU
    • Pensioner card with photograph
    • Bank certificate with attested photograph and bank account number
  • Proof of Address (any one):
    • Aadhaar Card
    • Voter ID Card
    • Driving License
    • Passport
    • Electricity Bill, Landline/Broadband Bill, Water Bill, Piped Gas Bill (not more than 3 months old)
    • Bank Account Statement/Passbook (not more than 3 months old)
    • Post Office Passbook
    • Credit Card Statement (not more than 3 months old)
    • Domicile Certificate
    • Property Registration Document
    • Allotment letter of accommodation by Central/State Government (not more than 3 years old)
  • Proof of Date of Birth (any one):
    • Birth Certificate issued by Municipal Authority or authorized office
    • Matriculation Certificate
    • Passport
    • Driving License
    • Marriage Certificate
    • Pension Payment Order
    • Aadhaar Card, Voter ID Card, Driving License, Photo ID card issued by Central/State Government/PSU (if it has DOB)
    • Affidavit sworn before a Magistrate stating the date of birth.
  2. For Indian Entities (Companies, Firms, LLPs, Trusts, AOP/BOI, Local Authorities):
  • Companies: Copy of Certificate of Incorporation (COI) issued by ROC.
  • Partnership Firms: Copy of Partnership Deed and Certificate of Registration (if registered).
  • LLPs: Copy of Certificate of Registration issued by Registrar of LLPs.
  • Trusts: Copy of Trust Deed or Certificate of Registration issued by Charity Commissioner.
  • AOP/BOI/Local Authority/Artificial Juridical Person: Copy of Agreement, Registration Certificate, or relevant document proving identity and address.
  • Proof of Address of Entity: Latest utility bill, rent agreement, property tax receipt, etc. (in the name of the entity).
  • For all entities: PAN of the proprietor/partners/directors/trustees/members of the governing body, along with their photos and Aadhaar (for Authorized Signatory).
  3. For Foreign Citizens (Individuals, Companies, Firms, AOP/BOI/Trusts - using Form 49AA):
  • Proof of Identity (any one):
    • Passport (mandatory)
    • Other national or citizenship Identification Number or Taxpayer Identification Number (duly attested by 'Apostille' or by Indian Embassy/High Commission/Consulate in the applicant's country).
  • Proof of Address (any one):
    • Passport (with address details, if available)
    • Bank account statement from the applicant's home country or India (NRE/NRO account statement)
    • Residence permit or registration certificate issued by the Foreigners Registration Office
    • Visa granted by Indian Government
    • Other national or citizenship Identification Number or Taxpayer Identification Number (duly attested by 'Apostille' or by Indian Embassy/High Commission/Consulate in the applicant's country).
  • Proof of Date of Birth (for individuals - any one):
    • Passport (mandatory)
    • Birth certificate issued by a foreign government.
  • For Foreign Entities (Companies, Firms, etc.):
    • Copy of Registration Certificate issued by the country of incorporation/registration.
    • Copy of approval/permission obtained from Indian authorities to set up an office in India.
    • These documents generally need to be attested by Apostille (for Hague Convention countries) or by the Indian Embassy/High Commission/Consulate in the applicant's country.
  • Passport-sized photograph(s).
  4. For Overseas Citizen of India (OCI Cardholders - using Form 49AA):
  • Proof of Identity:
    • Passport copy
    • OCI Card issued by Government of India
  • Proof of Address:
    • Passport copy
    • OCI Card issued by Government of India
    • Bank account statement in the country of residence or NRE bank account statement in India.
    • Registration Certificate issued by the Office of Foreigner's Registration indicating Indian address.
  • Proof of Date of Birth: Passport copy.
  • Passport-sized photograph(s).

  B. TAN Application Requirements (Form 49B):

  Unlike PAN, the TAN application (Form 49B) generally does not require separate identity or address proof documents to be attached. The application form itself asks for crucial details.

  • For Indian Entities/Individuals:
    
    
    • Name of the Deductor/Collector: Full name of the entity or individual applying for TAN.
    • Address of the Deductor/Collector: Full communication address (must be an Indian address).
    • Status of the Deductor/Collector: (e.g., Company, Individual, HUF, Firm, Government).
    • PAN of the Deductor/Collector: PAN is mandatory for TAN application.
    • Details of Responsible Person: Name, designation, and contact details of the person authorized to deduct/collect tax.
    • Area Code/AO Type/Range Code/AO Number: These jurisdictional details can be found on the Income Tax Department website or obtained through assistance.
  • For Foreign Companies/Entities (who have a TDS/TCS obligation in India):
    
    
    • Similar details as Indian entities.
    • While documents are not typically attached, the application relies on the accuracy of the PAN and entity details provided.
    • If a foreign entity has a Permanent Establishment (PE) in India, the address of that PE would be used.

  Note: The application process for both PAN and TAN is predominantly online through the NSDL or UTIITSL portals. Eaztaxbiz assists with the entire digital application, document preparation, and submission process.

• Partner with Eaztaxbiz in Pimpri-Chinchwad for accurate, quick, and hassle-free PAN and TAN registration for Indian Nationals, Foreign Nationals, and OCI cardholders.

  Contact us today to secure your tax identity!

  Eaztaxbiz – Your easy path to tax compliance.