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 manufacturers. 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.
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.
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