what is required for deducting tax on payment to parties among VAT,PAN,TAN,DIN
Answers
Answer:
Tax Identification Number (TIN)
An entrepreneur or self-employed businessman or woman would require TIN while making goods purchases and sales. To apply for TIN, the proprietor would need to furnish the following documents:
Identity proof of proprietor
Address proof of proprietor
Address proof of business
PAN card of proprietor
Tax Deduction and Collection Account Number (TAN)
Business setups need to deduct several taxes at source. TAN is a ten-digit alphanumeric number which has to be quoted by the proprietor on TDS returns and payments and any communication on TDS with the income tax department. Not quoting TAN while filing TDS return with income tax department can be fined up to Rs 10,000. The proprietor also needs to furnish TAN at the bank and link it with a bank account where TDS payments are received. Without a TAN number, banks will not receive TDS payments into the proprietor’s business account.
Value Added Tax (VAT)
The VAT replaced sales tax in 2005, and 2017 VAT was replaced by Goods and Services Tax or GST. A VAT is an indirect tax that is charged on products and commodities by the suppliers of the product as they pass through the supply chain and acquire value. To do away with the cascading effect of tax and set up an integrated tax regime for the entire country, the central government introduced the GST tax regime in 2017. The new GST calculation software can be installed in the accounts system to calculate the tax amount payable and receivable on various goods, services, and commodities.
Permanent Account Number (PAN)
PAN is a unique ten-digit alphanumeric identification number issued to individual and group entities. There is the individual PAN and the business entity PAN. Any entity, whether individual or group, having financial transactions must have PAN. For setting up a business, the proprietor first needs to apply with individual PAN and after that apply for PAN for the business setup. In India, all bank accounts in the name of any entity have to be linked with PAN number of that entity.
Digital Signature Certificate (DSC)
Sign and seal on documents and correspondence is a regular feature of the business. DSC apart from being time-saving comprehensively stores pertinent information of the user in condensed code form. DSC code contains information of:
User basic details – (Name, pin code, country, email contact)
Date of issue of Certificate of Incorporation of entity
Name of DSC certifying authority
DSC is a legal signature stamp and accepted as the legal signature of the entity. DSC is issued by certifying authority for one or two years and should be renewed within stipulated time limits.
Director Identification Number (DIN)
DIN is eight digits unique identification number allotted to existing or newly appointed directors of a company by the central government of India. Once issued DIN comes with a validity of lifetime and need not be renewed. User may update details as and when applicable. A director is allotted only singular DIN even if he or she is the director of more than one company. If the director leaves a company and joins another, the same DIN remains applicable, and only new details need to be updated. DIN is used whenever the director’s signature is required on any returns or communiqué issued by the company.