The Permanent Account Number (PAN) and Tax Deduction Account Number (TAN) serve distinct purposes. PAN’s primary role is to deter tax evasion by thoroughly monitoring all financial transactions. On the other hand, TAN allows taxpayers to claim any deducted tax in their income tax return. The Income Tax Department issues both numbers in response to a taxpayer’s request submitted in the required forms, i.e., Form 49A for PAN and Form 49B for TAN.

A PAN is necessary for creating and submitting an Income Tax Return, which is why every taxpayer must have one. Conversely, a TAN is needed by those responsible for withholding tax from payments made or due as per the income tax law. It must be quoted in TDS remittance challans, TDS certificates, and regular returns submitted to the Income Tax Department.