What is the Difference Between TIN, TAN, PAN, VAT, and DSC?


India holds a well-developed 3-Tier federal tax structure comprising of the Union Government, State Governments and the local rural/urban bodies. While starting a business, an entrepreneur has to gather the necessary permission from all these institutions and apply for some essential identification like TAN number, TIN, VAT, PAN, DSC, etc.

Being aware of these terms and knowing their differences is of crucial importance for a business owner. As entrepreneurs devise business strategies – they must also know the legal requirements which his business must fulfil. These legalities form a crucial part of business set-up and its expansion. Let’s take a look into these terms and where they differ from each other. 

What is TAN?

TAN (Tax Deduction and Collection Account Number) is a 10-digit unique code issued by the Income Tax Department to an enterprise, government firm or individuals. TAN is issued to entities that are subjected to TDS and TCS. 

TAN holders are required to quote their TAN in TDS/TCS returns, challan payments, financial transactions, reportable accounts statements or TDS/TCS statements.      

Importance of TAN

It is essential to know your TAN as it is mandatory for any individual or company, who collects or deducts tax at source on behalf of the IT department. Besides, failing to obtain TAN or declaring incorrect TAN can incur penalties of up to Rs. 10,000. 

Keep in mind; TIN centres reject TDS/TCS returns without a proper TAN. Financial institutions do not accept challan for TCS or TDS as well without TAN number full form of Tax Deduction and Collection Account Number.  

However, acquiring TAN is not a mandate under the following circumstances:

  1. For TDS under Section 194-IA while purchasing immovable properties.
  2. For tax deduction by a tenant – under Section 94-IB of the Income Tax Act. 

With this information, you have everything you need to know about the TAN number. Now, take a look at the other taxation terms.  

How is TIN different from TAN?

TIN (Taxpayer Identification Number) is a unique registration code used for identifying dealers who are registered under VAT. The major differences between the TAN number and TIN are: 

  • TAN is issued by the Income Tax Department while TIN is issued by the Commercial Tax Department.
  • The purpose of TAN is to streamline TCS and TDS, TIN is required for VAT related activities. 

What is VAT?

Value Added Tax (VAT) is levied to a product at every stage of production – right from the procurement of raw materials to finished goods. The term ‘VAT’ denotes the increase in goods and services’ value at every stage of production or transfer. 

The VAT registration and the TIN number is essential for all business sectors involved in trading, manufacturing, transporting, etc. This is also required when you prepare your business for a business loan.    

Importance of PAN

The principal usage behind PAN (Permanent Account Number) is to keep a track on your financial transactions that carry a taxable component. Like TAN number, PAN is also issued by the Income Tax Department as an essential form of identity. 

It is mandatory for every Indian Citizen to hold a PAN, especially who are starting an LLP. If you require funds, you can opt for financings like a Business Loan from lenders like Bajaj Finserv with the help of PAN and other documents. Further, keeping such document proofs handy when you avail pre-approved offers from any lender. 

These pre-approved offers are provided to existing customers – streamlining their loan application procedure through minimal documentation. The offers are applicable on business loans, personal loans, home loans and numerous other financial products. 

What is DSC?

DSC or Digital Signature Certificate is an electronic authorisation format and serves as identity proof for online transactions and e-filings. Similar to the TAN number, DSC is also essential for filing income tax returns. 

With this information at your disposal and following the checklist for a business loan application, your enterprise can scale new heights and boost profitability. 

Most relate to these taxation terms in one way or the other, while filing taxes or applying TCS or TDS certificates. Understanding the basic differences between PAN, TIN, TAN, VAT and DSC will allow you to meet your financial liabilities conveniently.