PAN is very essential for all entities and individuals.
It is not just used by the Income Tax Authority for tracking tax payments but has now become mandatory for many day to day transactions.
To start a new bank account or even an account on investment platforms like Groww, PAN card is needed.
Benefit of PAN Number
Who Can Hold a PAN Card?
Following entities can have a PAN card:
TAN is a Tax Deduction and Collection Account Number, which needs to be obtained by individuals or entities, who are mandated by the government to deduct or collect tax. Quoting your TAN in TDS or TCS return, payment, certificates, Annual Information Return and other documents is mandatory, else you may incur penalties.
What is the structure of TAN?
As a 10-digit alpha-numeric identifier, TAN has a unique structure. With the first four letters at the beginning, TAN has five numerals in the middle and a letter at the end. The components of TAN represent the following:
What is the importance of TAN?
Failure to quote TAN Number in documents can result in a penalty of Rs. 10,000. As per Section 203A of the Income Tax Act 1961, it is mandatory to quote TAN in the following documents:
What happens if you default?
Section 272BB of the Income Tax Act 1961 provides for a penalty of Rs. 10,000 in case the entity or individual collecting or deducting tax,fail to get the TAN or furnishes incorrect TAN details on the required documents.