Businesses established in India or those that sell their goods and services in India are also required to pay tax on their income. Moreover, they are required to have a Taxpayer Identification Number, called TIN or TIN number in short, which identifies them as a taxpaying entity. Let’s understand the concept of TIN and its other aspects in detail.
What is a Taxpayer Identification Number?
The Taxpayer Identification Number (TIN) is an 11-digit, unique identification number. The first nine digits are a unique code while the last two digits are the State-specific digits. The TIN number is allotted by the commercial tax department of every State to businesses and dealers that sell goods and services in India. The TIN number helps the tax department identify every business or company that is registered under VAT.
How does TIN work?
Businesses are required to provide their TIN numbers on different types of tax forms and returns. The income tax department has created the ‘Tax Information Network’ to monitor and track the tax-related details of every business. The TIN number helps the department to identify and authenticate businesses so that there are no fraudulent entities. Moreover, businesses can file their taxes easily by providing the TIN and also claim tax benefits.
Why is TIN needed?
The TIN number is needed for the following reasons
- It helps the income tax department identify business entities easily
- The tax-related details of all eligible business entities can be found on a unified portal with the help of the TIN
- The income tax department is able to access the complete details of a business by using its TIN
- TIN allows businesses to sell their goods and services in India
- TIN is needed to be mentioned on the tax filing documents of the business for ease of identification
How to apply for a tax identification number?
You need to do a TIN no. registration to avail of the unique number. The process for getting the tax identification number is as follows
- Apply for the TIN no. registration on the NSDL website
- Fill up the registration form specifying the details asked therein
- Submit the details and you would get a 15-digit acknowledgement number for TIN no. registration
- Save the acknowledgement form and point it out
- Sign in and then dispatch it to NSDL along with the relevant documents. You would also have to attach a cheque for the payment of the fee for availing the TIN number. The fee is INR 4600 and it can be paid through a cheque or demand draft drawn in favour of NSDL –ERI
- After the form is received and the documents are verified, NSDL would issue a user ID and password and the TIN number and send them to your email ID
- You can, then, log into your account and conduct a data transmission test. Once the test is completed, you would be able to use the TIN number and file your returns
Documents needed for TIN application
When applying for TIN, the following documents would be needed
- Registration form
- Due diligence certificate
- Identification proof of the business
- PAN card of the business owner
- Address proof of the business and the business owner
- 4 to 6 photographs of the business owner
- The first purchase or sale invoice
- Copy of the Lorry Receipts (LR) or Goods Receipts (GR)
- Proof of payment or collection of goods
- Bank statement
- Reference or security, if applicable
State Codes for TIN number
As mentioned earlier, the last 2 digits of the TIN number are specific State codes. The relevant codes of the Indian States are as follows
|Name of the State||State Code for TIN|
|Jammu & Kashmir||01|
|Daman and Diu||25|
|Dadra and Nagar Haveli||26|
|Andaman and Nicobar Islands||35|
Difference between TIN, TAN and PAN numbers
TIN, TAN and PAN are three distinct numbers that are quite different from one another. Here’s a comparative analysis of these numbers to understand how they differ
|Stands for Taxpayer Identification Number||Stands for Tax Deduction and Collection Account Number||Stands for Permanent Account Number|
|Allocated by the Commercial Tax Department||Allocated by the Income Tax Department||Allocated by the Income Tax Department|
|11-digit number||10-digit alphanumeric number||10-digit alphanumeric number|
|Applicable for businesses selling goods and services in India||Applicable for businesses and individuals responsible for TDS and TCS||Applicable for businesses and individuals for filing tax returns|
Ways to save taxes
There are ways in which you can save taxes to bring down your tax liability. Some of these ways are as follows
- Invest in a life insurance policy. Besides availing financial protection against premature death, you would also be able to save taxes. The premiums that you pay would be allowed as a tax-deductible expense, up to INR 1.5 lakhs. The death benefit would be tax-free. The maturity benefit too would be tax-free under Section 10(10D) subject to certain terms and conditions.
- Invest in a health insurance plan. The plan would also provide financial protection in the case of medical emergencies. Moreover, the premium paid would give you a deduction under Section 80D. You can claim deductions up to INR 1 lakh if you buy policies for yourself and your parents and the insured are senior citizens under both cases.
- Invest in an ELSS scheme. It is a mutual fund scheme that allows good returns and also helps you save taxes under Section 80C on the invested amount. The limit, however, is INR 1.5 lakhs.
- You can also explore other tax-saving avenues permitted under Section 80C like PPF, EPF, 5-year deposits, SSY, SCSS, etc.
- Opt for a home loan and move into your home. The principal that you repay for the loan is allowed as a deduction under Section 80C. The interest, on the other hand, is allowed as an exemption under Section 24(b) up to INR 2 lakhs. Additionally, if you fulfil some conditions, you can claim an additional deduction of up to INR 1.5 lakhs on home loan interest expenses.
Yes, if you do not mention the TIN number on your tax returns, you might attract penal interest or fees.
If your business is liable to deduct tax on any income, it needs to have a TAN. TIN is mandatory for conducting business. So, your business can have both TIN and TAN.
TIN is a State-specific number. So, you might need to apply for another TIN if you register your business in another State.
A business address is needed when applying for TIN. If you don’t have a business address and you are working from home, you can specify the home address as the business address.
Yes, the NSDL allows offline TIN registrations too. Fill up the registration form offline and submit it with the applicable fee and documents to get registered.