PAN and TAN Explained: What They Are, Who Needs Them and How to Apply

PAN and TAN are the two tax identification numbers most Indian businesses need before they can do much else. PAN identifies you as a taxpayer, and TAN identifies you as someone who deducts or collects tax on behalf of the government. Both are issued by the Income Tax Department, and the rules and forms for both changed on 1 April 2026 when the new Income-tax Act, 2025 came into force. This guide explains what each one is, who needs it, and how to apply.

What Is PAN and Who Needs It?

PAN, the Permanent Account Number, is a 10-character alphanumeric identifier issued by the Income Tax Department. It is unique to you and stays the same for life, even if you move house or city. You use it to file income tax returns, pay tax, open bank accounts, invest, and carry out other specified financial transactions. Under the new Act, PAN is governed by Section 262 of the Income-tax Act, 2025.

What a PAN looks like

A PAN has five letters, four digits and a final letter, for example ABCDE1234F. The fourth character tells you what kind of holder it is: P for an individual, C for a company, F for a firm or LLP, H for a Hindu undivided family, T for a trust, and so on. This is why a company and its director have different PANs.

Who needs a PAN

Individuals who file an income tax return, or who open a bank account, invest in securities or buy property or vehicles above the limits set in the rules
Companies, LLPs and partnership firms, which need their own PAN, separate from the PAN of their directors or partners
Trusts, societies, HUFs and associations that earn income or transact
Proprietors, who use their personal PAN for a sole proprietorship, since a proprietorship is not a separate legal entity
Non-residents with Indian income or transactions
Minors, who can have a PAN applied for through a parent or guardian

If you are setting up a company or LLP, the entity's PAN is normally generated automatically when it is incorporated, and TAN is generated with it.

One person, one PAN

You can hold only one PAN. Applying for a second one is an offence that can attract a penalty. If you find you have more than one, surrender the extra one to the Income Tax Department rather than continuing to use it.

Existing PANs are unaffected

The 2026 changes only affect new applications and corrections. Your existing PAN card stays valid, and you do not need to reapply.

What Is TAN and Who Needs It?

TAN, the Tax Deduction and Collection Account Number, is a 10-character number issued to anyone who is responsible for deducting tax at source (TDS) or collecting tax at source (TCS). It has four letters, five digits and one letter, for example BLRM12345A. Under the new Act it is governed by Section 397 of the Income-tax Act, 2025.

PAN and TAN do different jobs:

PAN identifies a taxpayer. It is about your own income and transactions.
TAN identifies a deductor. It is about tax you deduct from payments you make to others and pass on to the government.

Where TAN is required, you cannot quote PAN instead.

Who needs a TAN

You need a TAN if you have to deduct or collect tax, file TDS or TCS statements, or issue TDS or TCS certificates. In practice that means:

Employers who pay salaries above the tax-free limit and deduct tax from them
Businesses that pay rent, contractor or professional fees, commission or interest above the thresholds and must deduct TDS
Companies, LLPs and firms that regularly deduct tax
Sellers who must collect tax at source on certain sales
Government offices and public bodies that deduct tax

A single TAN covers both TDS and TCS, so you do not need a separate number for each.

When TAN is not needed

Some small or one-off deductions allow you to use PAN instead of TAN. A common example is a buyer of immovable property, who deducts tax when paying the seller and then files the statement and pays the tax using the buyer's own PAN. Individuals and HUFs who make only specified small deductions, such as tax on rent above the limit, may also use PAN in place of TAN. An individual who makes no payments that attract TDS or TCS does not need a TAN at all.

The penalty for not having one

If you are required to have a TAN and do not obtain and quote it, you can be liable to a penalty of ₹10,000. Banks also will not accept a TDS payment without a valid TAN, and a TDS return cannot be filed without one, so in practice you cannot comply without it.

Get it before your first deduction

Apply for a TAN before you make your first payment that attracts TDS. A company incorporated on the MCA portal receives its TAN automatically along with its PAN, but a proprietor, partnership firm or individual employer has to apply separately.

How to Apply for PAN

The new forms from 1 April 2026

From 1 April 2026, fresh PAN applications use one of four new forms under Rule 158 of the Income-tax Rules, 2026. The old Forms 49A and 49AA are no longer accepted.

Form 93 for individuals who are citizens of India, including minors applying through a guardian
Form 94 for Indian companies, LLPs, firms, trusts and other entities formed in India
Form 95 for individuals who are not citizens of India
Form 96 for foreign entities

Three ways to apply

1. Instant e-PAN, free. If you are an individual who does not already have a PAN, and your Aadhaar is linked to a working mobile number, you can get a free digital PAN on the Income Tax e-filing portal in minutes. It is paperless and needs no fee. You get an e-PAN, which is a valid form of PAN, but not a plastic card. It is not available if you already have a PAN linked to Aadhaar.

2. Online through Protean (formerly NSDL) or UTIITSL. Anyone can apply through these two authorised agencies, including companies, firms, trusts and non-residents. You fill in the form, upload documents, pay the fee and verify with an Aadhaar OTP or send papers. The official fee is ₹91 plus GST, about ₹107 in all, for an Indian communication address, and ₹862 plus GST for a foreign address.

3. Through a PAN service centre. You can also submit a paper application at an authorised centre.

Documents for an individual

Under the new forms, you generally need three kinds of proof:

Proof of identity, such as Aadhaar, passport, voter ID or driving licence
Proof of address, such as Aadhaar, a passport or a utility bill
Proof of date of birth, such as a birth certificate, passport or school leaving or matriculation certificate. Aadhaar is not accepted as proof of date of birth under the new rules.

You also need a recent photograph and signature. Aadhaar is mandatory for most applicants, and your mother's name is now a required field. Initials are allowed only if they match your Aadhaar record, and you must also give your full expanded name.

Documents for a company, LLP, firm or trust

An entity applies on Form 94 with proof of identity and address of the entity, proof of its date of incorporation or formation, and details of its authorised representative. A company or LLP incorporated on the MCA portal gets its PAN automatically as part of the incorporation, so it usually does not need to apply separately.

How long it takes

Instant e-PAN: usually within minutes
Protean or UTIITSL with Aadhaar e-KYC: the e-PAN typically arrives within a few working days, and the physical card follows by post, often within two weeks
Paper applications: longer, often a few weeks

Applications cannot be edited once submitted, so check every detail first.

How to Apply for TAN

The new forms

From 1 April 2026, TAN applications use two new forms under Section 397 of the Income-tax Act, 2025 and Rule 216 of the Income-tax Rules, 2026. They replace the old Form 49B.

Form 135 for everyone other than government bodies: individuals, sole proprietors, firms, LLPs, companies, trusts, HUFs and statutory bodies
Form 134 for government entities

What you need for Form 135

Your PAN, which is now mandatory for non-government applicants
Proof of identity, proof of address and proof of date of birth or incorporation. These supporting documents are now compulsory.
The CIN for a company and the registration number for an LLP
Details of the person responsible for deducting or collecting the tax, including their name and PAN

How to apply and what it costs

You can apply online through the Protean portal or on paper at an authorised PAN centre. Domestic companies and LLPs can also apply through the MCA portal. The fee is ₹77, inclusive of GST. When the TAN is allotted, the Income Tax Department sends a letter to your registered email address. Providers quote about seven to ten working days for allotment, and a TAN has lifetime validity.

Incomplete or deficient applications can be treated as invalid, and you cannot edit an application after you submit it. If details need fixing, you apply for a correction once the TAN has been allotted.

Corrections, Linking and Common Problems

Correcting or reprinting a PAN

If your name, date of birth, address, photo or signature on your PAN is wrong, or if you have changed your name, you apply for a correction on the same portals you use for a new application. You can also request a reprint of a physical card for an existing PAN. Providers quote about ₹50 for a correction or reprint with an Indian address, against ₹107 for a new application. A correction keeps the same PAN number and does not create a new one.

Correcting a TAN

You cannot edit a TAN application after you submit it. Once the TAN is allotted, any change is made through a change request for TAN holders.

Link PAN with Aadhaar

PAN and Aadhaar must be linked for most taxpayers, and an unlinked PAN can become inoperative, which can block filing returns, banking and investment transactions. Check your link status on the Income Tax e-filing portal, and fix any mismatch in name or date of birth between the two records.

Keep your PAN safe

Do not share your PAN card or number casually, and never share OTPs sent during application or verification.
Use only the official portals or authorised agencies. Lookalike websites charge extra or steal data.
If someone offers to get you a PAN "instantly" for a large fee, remember that the official instant e-PAN is free.

Common mistakes

Using the old forms. Applications on Form 49A, 49AA or 49B after 1 April 2026 are not accepted. Use Forms 93 to 96 for PAN and Forms 134 and 135 for TAN.
Using Aadhaar as proof of date of birth. It is not accepted for this purpose under the new PAN rules. Attach a birth certificate, passport or school certificate.
Name mismatch. Your name on the application should match your Aadhaar and other records, with initials only where the Aadhaar has them.
Applying for a second PAN. If you already have one, correct it rather than applying again.
Forgetting TAN. Businesses often register for GST and file returns but only realise they need a TAN when the first TDS payment is due. Apply before you deduct.
Not updating the details later. If your address or name changes, update both PAN and TAN records so notices and TDS certificates reach you.

This guide is general information, not tax advice. Forms, fees and rules change by notification, so confirm current details on the Income Tax Department website or with a chartered accountant before you apply.