As a salaried individual, we may be only receiving income and paying income tax on the income as per the IT rules. The IT department keeps records on our incomes and all our tax payments , IT return submission, refunds etc in a single permanent account on us. That account has a number and that is called Permanent Account Number or PAN number. The card given to us by the IT department specifying our PAN number is PAN card.
However for many of us tax relating to the salary paid to us is deducted by the employer himself and remitted to IT department. The employer deducts tax from his various employees and remits the amount to the IT department for credit to the relevant PAN accounts of each employee. Each person who makes a TDS deduction from payments needs a Tax deduction Account Number. That number is TAN number and given to them by the IT department on proper application.
TAN also significant for us, because if there are various TDS for us done by say on our FDs by different banks, then we can verify these from form26As by knowing the TAN numbers noted therein. That will help us to know if the TDS deducted is properly credited to our PAN account.