What is PAN?
PAN stands for Permanent Account Number. It is a ten-digit alphanumeric number, issued in the form of a laminated tamper proof card, by the Income Tax Department of India.
PAN is unique to an individual or entity and it is valid across India. PAN Card has details like your PAN, name, date of birth and photograph. PAN once allotted to an individual or entity is valid for lifetime.
A typical Permanent Account Number would look like CFZPP7167R.The logic behind the array of numbers and alphabets is as follows:
First three characters i.e. “CFZ” in the above PAN are alphabetic series running from AAA to ZZZ. Fourth character i.e. “P” in the above PAN represents the status of the PAN holder. Each holder type is uniquely defined by a letter from the list below:
1. “P” stands for Individual.
2. “F” stands for Firm.
3. “C” stands for Company.
4. “G” stands for Government.
5. “H” stands for HUF.
6. “L” stands for Local Authority.
7. “J” stands for Artificial juridical person.
8. “A” stands for AOP.
9. “B” stands for Body of individuals(BOI)
10. “E” stands for LLP
11. “T” stands for TRUST etc.
Fifth character i.e. “P” in the above PAN represents first character of the PAN holder’s last name/surname.
Next four characters i.e. “7167” in the above PAN are sequential number running from 0001 to 9999.
Last character i.e. “R” in the above PAN is an alphabetic check digit.
When it is mandatory to obtain a PAN?
1. Any person whose total income exceeds the maximum amount not chargeable to tax.
2. Individuals carrying on any business or profession whose total sales, turnover, or gross receipts are or is likely to exceed Rs 5,00,000 in any financial year.
3. For obtaining Import Export code by Importer/Exporter.
4. For obtaining Import Export code by Importer/Exporter.
5. Individuals who are entitled to receive any sum or income after deduction of tax at source.
6. Individuals who intend to do specified financial transactions where PAN is compulsorily required.
This rule do not apply to Central Government, State Governments and the Consular Offices.
Penalty in case of having multiple PANs
As per Section 139A of Income Tax Act, 1961 a person can hold only one PAN. Fine of Rs 10,000 can be imposed for holding more than one PAN.
What is TAN?
Tax Deduction and Collection Account Number is a 10 digit alpha numeric number required to be obtained by all persons who are responsible for deducting tax at source or collecting tax at source.
Structure of TAN
First 4 digits of TAN are alphabets, the next 5 digits of TAN are numeric and last digit is an alphabet.
First 3 alphabets of TAN represent the jurisdiction code, 4th alphabet is the initial of the name of the TAN holder who can be a company, firm, individual, etc. For example, TAN allotted to Mr. Vinay of surat may appear as under:
Who are liable to apply TAN?
Every person liable to deduct tax at source or collect tax at source is required to obtain TAN. It can be an individual, a Hindu Undivided Family, Partnership firms, Associations of persons, trusts, statutory, an autonomous body, a company, a branch or a division of a company.
However, a person required to deduct tax under section 194IA or section 194-IB or section 194M can use PAN in place of TAN as such person is not required to obtain TAN.
How to apply for TAN
There are two modes for applying for TAN:
1. OFFLINE – An application for allotment of TAN is to be filed in Form 49B in duplicate and submitted to any TIN-FC.
2. ONLINE — Online application for TAN can be made from the website of NSDL TIN website.
Where it is compulsory to quote TAN?
It is compulsory to quote TAN in following things:
1. TDS/TCS return (including any e-TDS/TCS return),
2. TDS/TCS payment challan,
3. TDS/TCS certificates,
4. Annual Information Return and other documents as may be prescribed.
Penalty for non-compliance
If a person fails to apply for TAN or do not quote the TAN in the specified documents, then the person will get a penalty of Rs. 10,000.
Frequently Asked Questions