What are the Differences between TAN, PAN and TIN

If you’re running a business in India, navigating the country’s tax system can initially seem daunting. Three important tax identification numbers you’ll come across are TAN (Tax Deduction and Collection Account Number), PAN (Permanent Account Number) and TIN (Taxpayer Identification Number). While they all serve tax purposes, each has its distinct role. Understanding the differences between PAN and TAN, as well as TIN, is crucial for tax compliance. Let’s dive into the full forms of TAN, PAN and TIN and clarify their key differences.

TAN: Full Form, Meaning and Purpose

TAN full form stands for Tax Deduction and Collection Account Number. It’s a 10-digit alphanumeric ID issued by the Income Tax Department, to entities that are responsible for deducting or collecting tax at source. The full form of TAN reflects its purpose – it’s used to track tax deducted at source (TDS) and tax collected at source (TCS).

Entities that require a TAN include:

• Employers deducting TDS from employee salaries
• Companies deducting TDS on payments to contractors or professionals
• Banks deducting TDS on interest income
• Buyers collecting TCS on goods over a certain value

TAN format includes 4 letters indicating the jurisdiction code and entity name, followed by 5 numbers and 1 letter at the end. It’s compulsory to quote your TAN on all TDS and TCS returns, challans and certificates.

PAN: Full Form, Meaning and Purpose

The full form of PAN is Permanent Account Number. It is a 10-digit alphanumeric ID. The Income Tax Department issues PAN to individuals and business entities. PAN serves as a national identification number for all tax-related purposes.

The key functions of PAN include:

• Enabling the Income Tax Department to monitor individuals’ and businesses’ financial transactions
• Facilitating smooth tax collection and preventing tax evasion
• Serving as a unique identifier for all tax filings and financial dealings

Entities that need to obtain a PAN include:

• All individuals with taxable income
• Companies and businesses
• Non-Resident Indians (NRIs) and foreign nationals working or investing in India
• Minors with income-generating investments

PAN is mandatory for a wide range of financial activities, such as opening bank accounts, receiving taxable income, purchasing assets above specified limits, obtaining a business loan, and more.

TIN: Full Form, Meaning and Purpose

TIN full form is Taxpayer Identification Number. The Commercial Department of State is responsible for issuing TIN. Before the rollout of the Goods and Services Tax (GST) in 2017, TIN was the primary identification number used by state tax authorities for Value Added Tax (VAT) purposes. It was crucial for VAT registration, compliance, transactions and returns filing.

Under the VAT system, entities that required a TIN included:

• Business owners and traders
• Manufacturers and service providers
• E-commerce sellers
• Importers and exporters

However, with the implementation of GST, GSTIN (GST Identification Number) has replaced TIN. GSTIN is now the universal tax ID for all businesses registered under GST.

Key Differences Between TAN, PAN and TIN

Aspect	TAN	PAN	TIN
Full form	Tax Deduction and Collection Account Number	Permanent Account Number	Taxpayer Identification Number
Number code	10-digit alphanumeric	10-digit alphanumeric	11-digit numeric
Issuing authority	Income Tax Department	Income Tax Department	Commercial Department of State
Regulating law	Section 203A of the Income Tax Act	Section 139A of the Income Tax Act	Differs from state to state
Purpose	Tracks tax deducted and collected at source	General ID for all income tax purposes	Was used to track VAT; now replaced by GSTIN for GST
Who needs it	Tax deductors and collectors like employers and banks	All taxpayers – individuals, companies, NRIs, etc.	VAT-registered businesses (now GSTIN for GST)

How TAN, PAN and TIN Relate to Business Loans

When you apply for a business loan, lenders will ask for your tax identification numbers as part of the documentation process. TAN, PAN and GSTIN (previously TIN) are essential for business loan applications.

Lenders use these tax IDs to verify your business’s identity, assess its tax compliance history and gauge its financial health. Proper tax filings associated with your TAN, PAN and GSTIN demonstrate responsible business practices and boost your credibility as a borrower.

For collateral-free business loans or unsecured business loans, where the lender doesn’t have a physical asset to recover the loan amount in case of default, your tax compliance becomes even more important in establishing trust. Online business loan applications also require submitting your tax IDs and filing records digitally.

Whether you’re seeking a short-term loan, long-term loan or any other type of business credit, having your TAN, PAN and GSTIN documentation ready can streamline the loan application process. It positions you as a responsible and creditworthy business in the eyes of lenders.

Conclusion

While TAN, PAN and TIN are all tax identification numbers, they play a unique role in India’s tax ecosystem. TAN full form reveals its function in tracking tax deducted and collected at source, PAN full form establishes it as a universal ID for all taxpayers and TIN full form, though replaced by GSTIN, was vital for VAT compliance.

As a business owner, understanding the difference between TAN and PAN, and how they factor into your tax obligations, is key to staying compliant. With the shift to GST, being aware of the transition from TIN to GSTIN is equally important.

When you’re seeking a business loan, collateral-free business loan, unsecured business loan, term loan, or any other type of business credit, having your tax IDs in order is part of the essential documents required for business loan approvals. This is especially true for online business loan applications.

If you need assistance with securing the right business loan for your needs, consider FlexiLoans. As an industry-leading fintech, FlexiLoans specializes in providing collateral-free business loans and unsecured business loans to small and medium enterprises through a fast and flexible online business loan process. With minimal documents required for business loan approvals and competitive interest rates, FlexiLoans aims to be your partner in hassle-free business financing.

FAQs

1. What is the full form of TAN?

TAN stands for Tax Deduction and Collection Account Number. It’s a 10-digit alphanumeric ID issued to entities responsible for deducting or collecting tax at source.

2. What is the full form of PAN?

PAN expands to Permanent Account Number. The Income Tax department issues 10-character alphanumeric PAN to individuals and businesses.

3. What is the full form of TIN?

TIN stands for Taxpayer Identification Number. It was the primary ID used by state tax authorities for VAT purposes before the implementation of GST in 2017. TIN has now been replaced by GSTIN (GST Identification Number).

4. What are the key differences between TAN and PAN?

The main difference between TAN and PAN lies in their purpose. TAN is used to track tax deducted and collected at source, while PAN is a universal ID for all income tax filings and financial transactions. All tax deductors / collectors need to have TAN, while PAN is mandatory for all taxpayers.

5. Are TAN, PAN and TIN required for business loan applications?

Yes, having your TAN, PAN, and GSTIN (previously TIN) in order is part of the documents required for business loan applications. Lenders use these tax IDs to verify your business’s identity and assess its tax compliance and financial health. This is crucial for loan approvals, especially for collateral-free business loans and unsecured business loans.