How to get VAT number for my business?

what is the difference between a vat registered and a non vat registered business if the business does not reach 2 million turnover?

There are mainly 2 reasons why you need to register for VAT. One if your taxable income exceeds a certain amount (Rs2 million at the moment) and secondly if you're engaging in specific businesses (read below).

Compulsory Registration under Section 15 (1)

Every person who, in the course or furtherance of his business other than those under part (c) below, makes taxable supplies and whose annual turnover of taxable supplies exceeds or is likely to exceed the amount of 2 million rupees is required to apply for compulsory registration under section 15(1) of the Value Added Tax Act.

Compulsory Registration under Section 15 (2) (a) (i) of the Act

Every person engaged in a business or profession listed hereunder and whose turnover does not exceed or is not likely to exceed the amount specified in paragraph (a) above, is required to apply for compulsory registration on a separate form (VAT 1A)

1. Accountant and or auditor
2. Advertising agent
3. Adviser including investment adviser and tax adviser
4. Architect 15. Notary
5. Attorney and or solicitor
6. Barrister having more than 2 years standing at the Bar
7. Clearing and forwarding agent under the Customs Act
8. Consultant including legal consultant, tax consultant, management consultant and management company other than a holder of a management licence under the Financial Services Development Act 2001
9. Customs house broker under the Customs Act
10. Engineer
11. Estate agent
12. Land surveyor
13. Marine surveyor
14. Motor surveyor
15. Notary
16. Optician
17. Project manager
18. Property valuer
19. Quantity surveyor
20. Sworn auctioneer
21. General sales agent of airlines
22. Dealers registered with the Assay Office under the Jewellery Act.
23. Banking
24. Insurance

Follow this link to find out more.

The TAN (Tax Account Number) is for MRA to uniquely identify a business and it's purely for taxation purposes.