TIN stands for Taxpayer Identification Number. It is an 11 digits unique number issued to a business which is registered under VAT, for the trade of various goods and services by the commercial tax department of the state. In this 11 digits number first, two digits signify the unique code of the state.
WHY IS TIN IMPORTANT?
- It helps in the identification of assets under the Income Tax Act.
- All business entities require tin for all their sale and purchase.
- It integrates at a single place all the information related to business enterprise operating in various states and carrying out inter-state as well as intra-state transactions.
TAN stands for Tax Deduction/Collection Account Number. Whenever a business is started and an employee is appointed, TAN comes into the picture. TAN is the number assigned to the individuals/ employers who need t deduct taxes on the payments made by them (under the income tax act, 1961).
A TAN number consists of 10 letters first three letters are the alphabets represent the city and the state issuing it. The fourth letter indicates the initial letter of the tax deductor i.e. the employer. The last five letters are a unique number.
Section 203A Income Tax Act, 1961, states that it is mandatory to quote TAN allotted by the income tax department in all TDS returns and challans while depositing the tax in the designated bank.
Non-application of tan number or not using the same in the specified documents is punishable with fine of ₹10,000.
VAT stands for Value Added Tax. It serves as a major source of revenue for all Indian states and union territories (except the Andaman and Nicobar Islands and Lakshadweep).
VAT was introduced as an indirect tax to replace all the existing sales taxes in the Indian taxation system. It was introduced in 2005 by The Value Added Tax Act, 2005. A product before reaching to the consumer passes through many levels of production and distribution and at every level some value is added to it. The value-added tax is a tax on this value addition at each stage.
All the business transaction involving the sales of goods or commodities within a state by any individuals, companies are covered under VAT.
# Not all goods are covered under this tax like a small business with sales below a certain limit.
Importance of VAT
- It enables a more transparent and uniform tax payment process.
- Similar types of goods are taxed at the same level. For e.g. a TV of any brand will be taxed on the same level as they belong to the same category.
- VAT keeps a regular check on all the transactions that take place before the goods reaching in the hands of a consumer. Thus the tax payment process becomes more efficient and easy.
PAT stands for Profit After Tax. It is also known as gain after tax. It is the amount of money which is left with the taxpayer after all necessary reductions are made. This can be used as a measuring instrument to measure the amount of money or profit that a business really earns.
Importance of PAT
- Helps in determining the health of a business
- Determines the profit that is earned by the business
DSC stands for Digital Signature Certificate. The provisions for this Digital Signature Certificate are contained in The Information Technology Act, 2000. It is mentioned that it is used as a digital signature n the documents submitted in electronic form in order to maintain maximum security and authenticity of the documents. These documents have the same status as if they had if they were in the physical state.
A DSC is valid only for a year or two. After which it has to be renewed. This further ensures the originality of the document.
- Easy transportability of the documents
- Security against the imitation of the signature
- Preservance of those documents
- It reduces the cost and time of signing and sending the documents as it can easily be scanned and mailed.
Type of Digital Signature
The DSC can be further classified into three types
- Class, I certificate: it is used for securing the e-mail conversation. – It confirms the user’s name and email address.
- Class II Certificate: used for incorporation of a company or LLP, IT return E- filing etc.
- Class III certificate: used for E-tendering, participation in E-auction. It includes various areas such as contract form, submission of bid document etc.
DIN stands for Director Identification Number. It is an eight-digit number allotted by the central government to the existing or intending director of a company as per the Company’s Act, 2013. It has lifetime validity. Through this, the details of the directors can easily be maintained in a database for easy access.
The most important feature of DIN is that the person can retain the same identification code throughout his life irrespective of the fact that whether the person is working for the same company for which it was obtained or not.
This article is authored by Akshita Pandey, Second-Year, B.A. LL.B student at Maharaja Agrasen Institute of Management Studies.