Everything You Need to Know About TAN

What is a TAN?

Tax deduction and collection account number (TAN) are a 10-digit alpha-numeric number issued by the Income Tax Department. It is given to a company, firm, government department, or individuals, who are required to deduct tax at source (TDS) or collect tax at source (TCS).

TAN holders must quote their TAN in TDS/ TCS returns, challans for TDS/ TCS payments, statements of reportable accounts or financial transactions, TDS/ TCS certificates, or any other documents required to have TAN.

Who needs TAN?

TAN is mandatory for any company, firm, or individual, who deducts or collects tax at source, on behalf of the Income Tax Department. Failure to obtain TAN or quoting incorrect TAN may incur a penalty of Rs. 10,000.

However, obtaining TAN is not compulsory in the following cases:

• Under section 194-IA, for tax deducted at source while buying immovable property, you can use your PAN instead.
• Under section 94-IB – tax deducted by a tenant (for home/ building/ land).

TAN allotted for TDS can be used for TCS (tax collected at source) too. TIN facilitation centres do not accept TDS/ TCS returns without TAN. Banks also do not accept challans for TDS/ TCS without TAN.

Applying for TAN

Obtaining TAN is important for tax collectors or deductors, and failure to quote it in certain documents may result in penalties. If you are looking to apply for TAN, you can either apply online or offline. The online method requires application through the TIN-NSDL website, while the offline process involves visiting the TIN facilitation centres.

Here is a detailed low down on applying for TAN:

Applying for TAN offline:

When you are applying for TAN offline, you will need to fill form 49B in duplicate and submit it at any TIN facilitation centre. If the TAN applicant is a company not registered under the Companies Act, 2013, the TAN application must be made in SPICe, or form No. INC-32. You can download the form from the ITD website or get it from the nearest TIN facilitation centres.

In case the address of the TAN holder changes to a different city that falls under a different regional computer centre of the ITD, you need to apply for a new TAN using form 49B. For any minor modifications or corrections of data, you would need a separate form.

Applying for TAN online:

1. Application

To apply for TAN online, you can visit the website.

2. Acknowledgement

Once you apply for TAN, you would see an acknowledgement screen, which will include:

• 14-digit unique acknowledgement number
• Status of application
• Name of applicant
• Contact details
• Payment details
• Space for signature (you will need to sign within each box, provided within the acknowledgement.)

3. Submit documents

After successfully submitting the online application, you would need to send documents showing your proof of identity and residence over to the TIN-NSDL application division.

4. Payment

The fee for the TAN application is Rs. 65, and the fee for TAN data correction is Rs. 63. You can make the payment via demand draft, cheque, credit card, debit card, or net banking.

To apply for TAN online, you can visit the website.

What are the documents required for TAN?

You do not have to submit any documents along with your TAN application. If in case you have applied online, you need to sign the acknowledgement generated online and send it to national securities depository limited (NSDL).

What if I have two TANs?

Possessing or using more than one TAN is illegal, but different branches/ divisions can have a separate TAN. If you have multiple TANs, you could continue with the TAN you use regularly and surrender the other one(s) for cancellation using ‘form for changes or correction in TAN’. You could procure this form from the nearest TIN facilitation centre or download the same from the TIN-NSDL website.

When can I get TAN cancelled?

You should get your TAN cancelled in the following cases:

• If you have multiple TAN.
• If your TDS is not deducted anymore, as you no longer need to require TAN.

In this case, you should send an application to the jurisdictional assessing officer (TDS), stating the reasons for cancellation.

What are the benefits of TAN?

You must quote your TAN number in your TDS or TCS return, payment certificates, annual information return, and other documents; else you could incur penalties. TAN is used for deductions like salary, interest, or dividends and should be quoted in returns, challans, and certificates.

Why do you need TAN?

TAN helps you deposit TDS to the Central Government account and generate Form 16. The ITD also uses TAN to auto-capture data like the name, address, and postal index number of the TAN holder. TAN can also be used for filing TDS returns, generating challans and certificates.

How TAN affects your tax deduction?

Individuals deducting or collecting tax at source need to have TAN; otherwise, they may not deduct taxes from salaries and commissions to another person. TAN is mandatory if you are looking to make legal salary transactions.

Failure to quote your TAN in some of these important documents can result in a penalty, which is why quoting your TAN is even more important. It is also important to deposit TDS/ TCS, impacting your deductions and even affecting your tax certificates.

What is the difference between TAN, TIN and PAN?

It can get taxing to understand terms like TAN, TIN, and PAN, especially when they pop up frequently during conversations about filing taxes or when you approach the ITD for clarification.
Here is a brief lowdown on helping that you understand the differences between TAN, TIN, and PAN:

Tax payer identification number (TIN) is used to identify a business person/ entity who is registered under VAT and is issued by the commercial tax Department of each state government.

TAN, meanwhile, is issued to the person/ entity who deducts tax at the source.

PAN is issued to all tax-payers - individuals, firms, companies, foreign citizens.

As you delve deep into these terms, you can observe how each of these terms sounds similar, but understanding them can help you know the world of taxation better. In the past few years, the structure of TAN has been modified multiple times to avoid any hassle while furnishing your returns.

Additional read: Difference between TAN, TIN & PAN.