What is the difference between TAN and TIN regarding income tax?

Written by : Knowledge Centre Team

2024-08-02

928 Views

Locate branch

Resume journey

Pay Premium

Individual taxpayers and corporations in India require various documents while filing income tax returns (ITRs). While the process itself can seem daunting, the various terms associated with the process can further complicate matters, especially for those filing income tax returns for the first time. The two most common terms that come up either while filing taxes, or while communicating with the Tax Department are TAN and TIN.

Tax Deduction and Collection Account Number (TAN)

The Tax Deduction and Collection Account Number (TAN) is a unique ten digit alpha-numeric code, assigned by the Income Tax Department to all the entities, that are responsible for collecting or deducting taxes. Furthermore, under section 203A of the Income Tax Act, 1961, in order to furnish the TDS details collected by the entity such as corporations and offices which deduct taxes, TAN is mandatory. Section 203A has also made it mandatory to quote TAN for documents including TDS and TCS statements, TDS and TCS certificates, and challans for payment of TDS and TCS among others.

Taxpayer Identification Number (TIN)

The Taxpayer Identification Number (TIN), similar to TAN, is a unique eleven-character identification number that is given to Indian enterprises and organizations for which Value Added Tax (VAT) is applicable, such as e-commerce stores and product or service manufactu rers. Quoting of TIN has been made mandatory for business enterprises while filing taxes, and is applied for sale transactions that happen within a state, and those that happen between two or more states. The Taxpayer Identification Number (TIN) also makes it easier for entities to have all the VAT transactions in one centralized place. This also enables entities to see the amount of VAT collected, paid or to be paid in the future.

Differences Between TAN And TIN

Both TAN and TIN are tax identification numbers. However, while the Taxpayer Identification Number (TIN) is beneficial for both the state and the entity, the Tax Deduction and Collection Account Number (TAN) is assigned to companies and financial institutions. TAN helps in keeping track of the collection and deduction of taxes that take place at the source. Apart from that, here are some of the key differences between TAN and TIN.

Allocation Agency: The Income Tax Department of India allocates the Tax Deduction and Collection Account Number (TAN), while the Commercial Tax Department of the applicant’s state allocates the Taxpayer Identification Number (TIN).
Number composition: TAN is a ten digit alpha-numeric number, which is assigned to entities that are responsible for collecting and deducting taxes. TIN, on the other hand, is an eleven digit registration number assigned to business enterprises and companies, for whom VAT is applicable.
Purpose: TAN’s purpose is to streamline collection and deduction at the source. Meanwhile, TIN is used to track VAT-related activities in India.
Forms to be filled while applying: Individuals applying for TAN must fill Form 49B, while different states have different forms for entities applying for TIN.
Documents to be submitted: While applying for TAN, individuals needn’t submit additional documents with the application form. However, while applying online, one has to submit a signed acknowledgment generated to the NSDL. For TIN however, the documents required include identity and address proof, along with other documents which vary from state-to-state.

Conclusion: The Taxpayer Identification Number (TIN) is for entities such as traders and manufacturers, for which Value Added Tax (VAT) is applicable. For these business enterprises and companies, quoting TIN is mandatory while filing taxes.

The Tax Deduction and Collection Account Number (TAN) is assigned to all the entities that are responsible for deducting or collecting taxes at the source. For instance, companies that deduct tax from their employer’s salary, before paying them the net amount require TAN.

TDS is usually applicable on salaries, commissions and interests. When it comes to life insurance policies, TDS is usually deducted on the maturity amount. With the iSelect Smart360 Term Plan from Canara HSBC Life Insurance, you can also avail tax benefits on the premiums paid, along with the benefits as per the tax laws. Furthermore, with the iSelect Smart360 Term Plan, you can avail features such as whole life cover, return of premium, multiple payout option and increased coverage option.

Difference between the current GST and the new GST return system in India?

Types Of Tax Saving In India

Tax Savings - Top Selling Plans

We bring you a collection of popular Canara HSBC life insurance plans. Forget the dusty brochures and endless offline visits! Dive into the features of our top-selling online insurance plans and buy the one that meets your goals and requirements. You and your wallet will be thankful in the future as we brighten up your financial future with these plans.