Process of PAN/TAN Application
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PAN refers to the Permanent Account Number & TAN refers to the Tax deduction Account Number. The basic function of PAN is to prevent tax avoidance by keeping a complete track of monetary transactions. Whereas TAN enables the assessee who has paid tax to claim the tax deducted in their Income tax return. The Income tax department issues both the numbers against the application by the assessee in the prescribed form i.e., Form 49A for PAN and Form 49B for TAN.
PAN is required while preparing and filing Income Tax Return. Therefore every assessee should hold a PAN whereas TAN is required for those who are accountable for paying tax from the amounts paid or payable as per the income tax act and to be quoted in TDS remittance challans, TDS certificate, and periodical return to be filled with the Income tax department.
Documents required for PAN/TAN Application
For PAN Registration:
- Valid ID proof (Voter ID/Aadhar card/Driving License/Passport)
- Address proof (Electricity Bill/Aadhar card/Passport/Driving License)
- Photographs ( In case of individuals)
- Proof of Age ( Birth Certificate/Aadhar card/Passport/Driving License)
For TAN Registration:
Applicants are not required to submit any documents while applying for a TAN. The only thing they need to submit is the signed acknowledgement slip.
- A penalty of Rs 10,000 can be imposed for failure to comply with the rules.
Frequently asked questions
What is PAN
Permanent Account Number (PAN) is a 10 digit alphanumeric identifier, issued by Income Tax Department. Each assessee (e.g. individual, firm, company etc.) is issued a unique PAN.
What is TAN?
TAN or Tax Deduction and Collection Account Number is a 10 digit alphanumeric number required to be obtained by all persons who are responsible for deducting or collecting tax. It is compulsory to quote TAN in all TDS/TCS returns, TDS/TCS payment challans and TDS/TCS certificates.
Who can apply for PAN?
All existing assessees or taxpayers or persons who are required to file a return of income, even on behalf of others, must have a PAN. Any person, who intends to enter into economic or financial transactions where quoting PAN is mandatory, must also have a PAN.
Who must apply for TAN?
All those persons who are required to deduct/collect tax at source on behalf of Income Tax Department are required to apply for and obtain TAN.
Why is it necessary to have TAN?
The provisions of Section 203A of the Income-tax Act, 1961 require all persons who deduct or collect tax at source to apply for the allotment of TAN. The section also makes it mandatory to quote TAN in all TDS/TCS/Annual Information Returns, payment challans and certificates to be issued. If TAN is not quoted, TDS/TCS returns will not be accepted by TIN-Facilitation Centers (TIN-FCs) and challans for TDS/TCS payments will not be accepted by banks.
Is it compulsory to link Aadhaar with PAN?
Section 139AA of the Income Tax Act states that every person who has PAN is required to link his/her PAN with his/her Aadhaar number. Section 139AA also requires mandatory quoting of Aadhaar while applying for new PAN and also while filing return.