Six Abbreviations of Company Registration
- PAN
PAN can be expanded into Permanent Account Number. It is a 10-character identification number which is located on a photo-identity card, that is issued by the Income Tax Department. The main purpose of PANs is to keep a check on income tax transactions and other large financial transactions, while checking the rampant problem of tax evasion.
Any person who is an assessee under the Income Tax Act (this may be an individual, or any judicial entity) requires a PAN number, at the time of filing a return of income. It is necessary to quote the PAN whenever filing income tax returns or any other correspondence with the Income Tax Department. Unlike many similar documents like Aadhar or passports, it is not necessary for an applicant to be an Indian citizen. PAN is concerned only with financial transactions and any person who have financial interests in India may apply for it.
The usage of PAN is not restricted to income tax. Many large financial transactions also require a PAN number before the transaction can be made, in order to maintain transparency. One can now apply for PAN online, and the process has been made much easier.
- TAN
TAN can be expanded into Tax Deduction and Collection Account Number. Similar to PAN, it is a ten-character number issued under the Income Tax Act, however, the purpose of PAN and TAN are slightly different.
While PAN is meant for individual income tax payments, entities which apply for TAN are those which are liable to deduct TDS, or Tax Deductable at Source. TDS is a certain way of collecting income tax in India. Unlike regular income tax, which is paid out of the income once it is received by the person, Tax Deductable at Source is deducted by the income payer themselves, before the amount is transferred to the payee. For example, a company while paying salary to it’s employees may first deduct their income tax and then pay them only the salary after deduction. In this case, the company is liable to deduct TDS and must have a TAN account. Again, this is another mechanism which helps prevent tax evasion.
- MOA
An MoA or a Memorandum of Association, is one of the basic and most important documents of a company. When a company is created, or incorporated, then the Memorandum of Association must be filed with the Registrar of Companies. It contains a lot of basic information about the company itself.
The Memorandum of Association contains a number of clauses. Some are mere formalities, such as the name clause, which requires the name of the company and the registered office clause, which mentions the State in which the registered office is to be situated. Most important is the objects clause. This lays down the basic objects of the company and the purpose for which the company is established. The liability clause demarcates the liability of the members of the company, such as shareholders. The capital clause then states the authorized capital of the company and how it divides this capital into shares. Hence, these main clauses are required to the be present in the Memorandum of Association at the incorporation of a company.
- AOA
The AoA or the Articles of Association are another constitutive document of the company which accompany the Memorandum of Association.
In contrast to the Memorandum of Association, the Articles of Association are a document mostly used for the management of internal affairs and not for the purpose of providing information to the public. While it also needs to the be filed with the Registrar of Companies, the company can use its discretion in the contents of the Articles of Association. It contains information such as the rights, duties and responsibilities of the members of the company. It also deals with the appointment of directors, how meetings are to be conducted by the directors and the internal decision-making powers and processes.
- DIN
A DIN or a Director Identification Number is an identification number which is given to each director of a company. It is particular to the individual and not to the position. This means that each individual person will have only one DIN, even if he is the director of more than one or multiple companies. This is so that all the activities of this person can be managed and ensures transparency.
The main purpose behind the DIN is to prevent directors from indulging in malpractices and raising capital from investors and then cheating them. It is now mandatory for all new companies to apply for DINs for their directors. The application for a DIN can now even be done online.
- DSC
A DSC or a Digital Signature Certificate is an essential component during the e-filing of taxes. E-filing is mandatory for those individuals who have an annual gross receipt of above Rs. 25 lakhs or for businesses with an annual turnover of over Rs. 1 crore.
The main purpose of a Digital Certificate is to ensure that all online transactions involving large amounts of money are done in a secure manner by authenticating the identity of the sender. It uses certificates to encrypt information and ensures complete privacy. Replacing it is also quick and pain less if you follow the instructions on: application-filing-service.com/socialsecuritycard/replacement-social-security-card-child/
Author: This blog is written by Ms. Sweta Pochiraju, student of National Law University-Delhi, a passionate blogger & intern at Aapka Consultant.
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