TIN vs TAN: Difference and Comparison

Tax is a charge that is imposed on everyone in every country. Tax is a financial charge imposed and paid compulsorily by every taxpayer in a country.

The government taxes anyone, whether a citizen or an organization. Tax acts as a medium through which the expenditures for the public and the spending of the government can be funded and met.

Taxes help the government provide us with the necessary goods and services such as bridges, parks, education, national defence, roads, etc. The government can also influence taxes to ensure the stability of that country’s market. That is, tax plays a huge role in ensuring economic stability.

Each tax has a certain tax number, be it Income tax, GST, Land tax, Building tax, Professional tax, Water tax, etc. TIN and TAN are two such numbers that are confused with each other and sometimes even for unrelated things.

Key Takeaways

  1. TIN (Taxpayer Identification Number) is a unique 11-digit number used to identify taxpayers. At the same time, TAN (Tax Deduction and Collection Account Number) is a 10-digit alphanumeric code required for businesses that deduct or collect tax at source.
  2. TIN is issued by state governments, while TAN is issued by the Income Tax Department of India.
  3. While both TIN and TAN are used in the taxation process, TIN is primarily used for indirect taxes such as VAT, while TAN is used for direct taxes such as income tax.

TIN vs TAN

TIN, or Tax Identification Number, is assigned to a taxpayer by the government for tax purposes. TAN, or Tax Deduction and Collection Account Number, is a 10-digit number issued by the Indian Income Tax Department to entities responsible for deducting or collecting tax. It is also used for tracking tax collections.

TIN vs TAN
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Comparison Table

Parameter of ComparisonTIN   TAN 
Acronym  TIN is the acronym for Taxpayer Identification Number.TAN is the acronym for Tax Deduction and Collection Account Number.
Number composition  Taxpayer Identification Number consists of an 11-digit code which are all numbers.Tax Deduction and Collection Account Number consists of a 10-digit alphanumeric code.
Purpose  TIN aims to track payments relating to any company or individual paying VAT. TAN aims to track Tax Deductions and Tax Collections at and from the source.  
Eligible entities   Anyone who pays the Value Added Tax or VAT is eligible and has to register for TIN.Anyone who deducts or collects tax at and from the source, respectively, is eligible and has to register for TAN.
Allocating agency   TIN is allocated to an entity by the Commercial Tax Department of the state of the payer.TAN is allocated to an entity by the Income Tax Department of India.

What is TIN?

There are several taxes for different provisions such as land, water, building, income, goods and services. Each tax has a particular number associated with it. TIN and TAN are two such numbers. Each number is quite important for availing the provisions.

TIN is the acronym for Taxpayer Identification Number. As the name suggests, it acts as an identifying code for a taxpayer. However, the purpose of this number is to track the transactions of any entity that pays the VAT.

VAT is the acronym for Value Added Tax. It is a tax paid by anyone who extends and adds value to any kind of product or service, such as sellers, traders, e-commerce stores, or any other individual or store.

Any entity that pays the Value Added Tax must have the TIN. Anyone who pays the VAT has to register for the TIN. TIN helps to pay entities in a lot of ways. With the help of the Taxpayer Identification Number (TIN), all VAT payments acquire a common, centralized place.

TIN acts as a record of all the VAT that is paid, collected or has to be paid by the entity. Thus, TIN helps in keeping a record of VAT transactions. The Taxpayer Identification Number is an 11-digit code that consists of all numbers. The first two digits denote the state from which the TIN was issued.

TIN is allocated by the Commercial Tax Department of the entity’s state. In the United States of America, TIN is issued by the Internal Revenue Service (IRS) or the Social Security Agency.

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What is TAN?

TAN is the acronym for Tax Deduction and Collection Account Number. As the name suggests, it is associated with tax deductions and collections. The purpose of this number is to track the tax deductions and collections at and from the source, respectively.

TAN helps keep track of the tax deducted at the source, called TDS, and the tax collected from the source, which is called TCS. TAN also helps in keeping a record. TAN acts as a reference point in the documents of the company.

And this is why TAN is one number required by banks, companies, etc. For example, a company that pays its employees requires TAN since the net amount received by the employees is only after the tax has been deducted.

Any entity that deducts tax at source (TDS) or collects tax from source (TCS) is eligible and must register to acquire TAN. Anyone who deducts or collects tax at the source must have a TAN number. Tax Deduction and Collection Account Number is a 10-digit alphanumeric code; that is, it consists of both letters and numeric digits.

The first four letters of the code denote the state in which the TAN number was issued and the entity’s initials. The last digit is also a letter. The numeric digits in the middle are random numbers.

The Income Tax Department of India allocates TAN.

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Main Differences Between TIN and TAN

  1. The main difference between TIN and TAN is their purpose. TIN tracks the transactions of entities that pay VAT, also called Value Added Tax. But TAN is used to track the tax deductions and tax collection at source.
  2. TIN stands for Taxpayer Identification Number. But TAN stands for Tax Deduction and Collection Account Number.
  3. Anyone who pays Value Added Tax or VAT is eligible and has to register for TIN. But anyone who deducts and collects tax at source is eligible and has to register for TAN.
  4. While TIN is an 11-digit code consisting of all numbers, TAN is a 10-digit code consisting of letters and numeric digits.
  5. TIN is assigned or allocated by the Commercial Tax Department of the entity’s state. But TAN is assigned or allocated by the Income Tax Department of India.
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References
  1. https://www.ilomata.org/index.php/ijtc/article/view/44
  2. http://www.indianjournals.com/ijor.aspx?target=ijor:ijemr&volume=7&issue=5&article=017

Last Updated : June 11th, 2023

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