Know TAN: Tax Deduction and Collection Account Number
What is a TAN?
In India, the Income Tax Department issues a unique 10-digit alphanumeric code called the Tax Deduction and Collection Account Number (TAN) to entities responsible for deducting or collecting tax at source (TDS/TCS). This number plays a vital role in TDS compliance.
Who needs a TAN?
Businesses and individuals who deduct tax at source (TDS) on payments made, such as salaries, interest, rent, etc. Entities collecting tax at source (TCS) on specific transactions.
Why is a TAN important?
Mandatory for filing TDS/TCS returns: You cannot file TDS/TCS returns without a valid TAN.
Required for challans and certificates: A TAN is needed to obtain challans for TDS/TCS payments and issue TDS/TCScertificates to deductees.
Streamlines tax compliance: Possessing a TAN ensures proper documentation and avoids processing issues with TDS/TCS payments.
How to obtain a TAN?
There are two ways to apply for a TAN:
Online: This is the preferred method. You can apply through the NSDL-TIN website. The process involves registration, filling out an online application, and making a nominal payment.
Offline: You can download Form 49B from the Income Tax Department website or obtain it from a TIN-FC center. Fill out the form and submit it to the nearest TIN-FC center.
What information is required for a TAN application
Basic entity details (name, address, etc.
Category of deductor (company, individual, etc.)
Contact information
TAN vs. PAN: Understanding the difference
While both are issued by the Income Tax Department, TAN and PAN serve distinct purposes:
|
Feature |
PAN |
TAN |
|
Purpose |
Unique identifier for taxpayers |
Facilitates TDS/TCS processes |
|
Issued to |
All taxpayers |
Entities deducting/collecting tax at source |
|
Governing Law |
Section 139 of the Income Tax Act, 1961 |
Section 203A of the Income Tax Act, 1961 |
|
Required by |
Every taxpayer |
Not everyone; only those deducting/collecting tax at source |
|
Application form |
Form 49A (Indian citizens) or Form 49AA (Foreigners) |
Form 49B |
|
Application cost |
Varies depending on citizenship |
Rs. 55 + GST |
Benefits of using a TAN:
Ensures proper TDS/TCS compliance
Simplifies tax filing procedures
Reduces the risk of penalties for non-compliance
Future of TAN:
The government plans to update the process by potentially merging TAN applications with other business registration forms like SPICe for a more efficient "Ease of Doing Business" environment.