Indian Income Tax Laws and more.
- Every Indian citizen earning a fixed amount of salary or income is liable to pay taxes to the government.
- There are different income slabs to determine the total amount of tax payable by a person.
- Taxes are of different types like direct taxes, indirect taxes, state taxes, central government taxes, etc.
- India has a well-defined tax system for its citizens.
- After all, taxes are one of the most significant sources of income for the Indian government.
- The government uses these funds collected for various projects and purposes.
- The main motive is to develop the country and generate maximum employment opportunities for the citizens.
Understanding the concepts of TAN and TIN
- Corporations and individual taxpayers in India need to submit various documents while filing their ITR (income tax returns).
- This process might seem overwhelming initially with complex-sounding procedures.
- The two most important and common terms you will come across while filing taxes are TAN and TIN.
- Let us understand more about these two terms.
What is TAN?
- TAN or the Tax Deduction and Collection Account Number is a 10-digit alpha-numeric code.
- The Income Tax Department gives these codes to all the responsible bodies for deducting or collecting taxes.
- It is mandatory to write TAN on all the TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) returns.
- Moreover, banks do not accept the TDS or TCS challans if they do not have TAN details on them.
- The authorities have a right to charge a penalty of Rs. 10,000 in case of any discrepancy.
What is TIN?
- TIN stands for Taxpayer Identification Number.
- Every business enterprise registered in VAT (Value Added Tax) or CST (Central Sales Tax) should have a valid TIN.
- It is an 11-character code that the Commercial Tax Department of the state allotted to the business entities.
- This code helps the companies in tracking their VAT and business transactions.
Why was the concept of TIN introduced in India?
- The government aims to consolidate all the tax-related information for business enterprises in a single place.
- In other words, it is a database of all the intra-state and inter-state business transactions.
What is the difference between TAN and TIN?
- Although these both are unique identification numbers, they have some prominent differences as well.
- Let us have a look at some of them:
- TAN – The Income Tax Department of India allots the Tax Deduction and Collection Account Number (TAN).
- TIN - Commercial Tax Department of the state allocates TIN to the business enterprises.
- TAN – TAN is ideally a 10-digit alpha-numeric code. It is assigned to all the entities that are eligible to deduct or collect taxes.
- TIN – TIN is an 11-digit registration code. This code is given to all the companies and business enterprises who come under VAT payment rules.
- TAN – The primary purpose of TAN is to streamline the deduction and collection at the source.
- TIN – The main reason for implementing TIN is to track all the country's VAT-related transactions.
- TAN – People who wish to apply for TAN need to fill Form 49B.
- TIN – Every state has a different form for the companies and entities willing to apply for TIN.
- TAN – You need not submit any additional documents while applying for TAN physically. However, if you are applying online, you need to submit a signed acknowledgment generated to the NSDL.
- TIN – Entities and companies need to submit documents like address proof, identity proof, and others as per the state rules.
Who should have it?
- TAN – Any individual or entity eligible for TDS on behalf of the Income Tax Department should have a TAN.
- TIN – Any company or entity that is bound to pay VAT should have a unique TIN.
Penalties and Fines
- TAN – The defaulter can be imposed with a fine up to Rs.10,000.
- TIN – The state decides the penalty or fine of the defaulter.
- So, this was all about the taxes in India, TAN, and TIN.
- Every Indian citizen and entity must pay taxes on time.
- After all, these funds will play a vital role in the development of the country.
- In case of any queries, you should refer to the relevant website or connect with an expert.
Q- What happens when you submit an incomplete Form 49B?
Ans- The Income Tax Department has the authority to reject the TAN application of any person or entity who submits an incomplete Form 49B.
Q- Who allocates TAN to applicants?
Ans- Although the Income Tax Department of India assigns TAN, however, TIN facilitation centers and TIN-NSDL are the major entities that allocate TAN on behalf of the Income Tax Department.
Q- How to enquire about TAN application status?
Ans- You can get all the details about your TAN application through the NSDL-TIN website. Click on the Status Track option and enter your code to get your application status.
Q- How will you receive your TAN?
Ans- In coordination with NSDL, the Income Tax Department will send your TAN to the address given in the Form 49B.
Q- It is mandatory for a government agency that deducts TDS on behalf of the IT department to possess TAN?
Ans- Yes, any government agency or entity (private or public) that deducts tax on behalf of the IT department should furnish TAN whenever required.
Q- Can you hold multiple TANs?
Ans- Holding multiple TANs is illegal as per The Indian Tax Act, 1961. However, in case a person or entity gets two TANs, it gives rise to a matter of duplicate TAN.
Q- What should you do when you have two TANs in your name?
Ans- Ideally, it would be best if you used the TAN that was allotted to you earlier. On the other hand, you must surrender the new or duplicate TAN. You can find the relevant form on the official website of TIN-NSDL.
Q- Can I edit the details of my TAN?
Ans- Yes, you can request edits in your TAN information like name or address. You need to fill a modification/correction form available on the TIN-NSDL website. The same process has to be followed when you are applying for offline corrections or information modifications. However, you need to go to a TIN facilitation center for that.
Q- Is there any penalty for possessing multiple TINs?
Ans- Just like PAN, holding multiple TINs can attract a penalty. However, the state decides the applicable penalty amount.
Q- Do I need to apply for different TANs for deducting tax from other types of payments like dividend, interest, salary, and so on?
Ans- No, there is no need to apply for separate TANs here. One TAN is enough for all the types of collections and deductions.