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Tax Deduction and Collection Account Number (TAN)
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OVERVIEW
Tax Deduction and Collection Account Number (TAN) is a 10-digit alphanumeric code issued by the Income Tax Department of India. It is mandatory for individuals and entities responsible for deducting or collecting tax at source (TDS/TCS). Without a TAN, a deductor cannot deposit TDS with the government, making it essential for businesses, organizations, and employers. TAN registration ensures compliance with tax regulations and helps streamline tax deductions and collections.
Key Features Of TAN Registration
- • Mandatory for TDS and TCS Payments : TAN is required by any individual or entity responsible for deducting Tax Deducted at Source (TDS) or collecting Tax Collected at Source (TCS) while making specified payments like salaries, professional fees, or rent.
- • Issued by the Income Tax Department : The TAN is allotted by the Income Tax Department and is unique to each deductor, ensuring smooth processing of tax deductions and collections.
- • Lifetime Validity : Once issued, TAN remains valid for a lifetime, and there is no requirement for renewal. However, any changes in details such as address or contact information must be updated.
What is TAN ?
TAN, or Tax Deduction and Collection Account Number, is a unique 10-digit alphanumeric code issued by the Income Tax Department of India. It is mandatory for all individuals, businesses, and organizations that are responsible for deducting Tax Deducted at Source (TDS) or collecting Tax Collected at Source (TCS) while making specific payments, such as salaries, professional fees, rent, or contractor payments. TAN ensures that the deducted tax is deposited with the government and credited to the recipient's account.
The primary purpose of TAN is to enable seamless tracking and processing of TDS and TCS transactions by the Income Tax Department. Every entity deducting TDS is required to quote its TAN in all TDS-related documents, including TDS returns, challans, and certificates. Without a valid TAN, businesses and employers cannot submit TDS payments, which may result in penalties.
TAN is different from Permanent Account Number (PAN), which is used for personal and corporate taxation. While PAN identifies taxpayers, TAN is specifically meant for tax deduction and collection purposes. Once issued, TAN remains valid for a lifetime and does not require renewal. However, any changes in the entity's details, such as address, contact information, or ownership, must be updated with the Income Tax Department.
TAN registration is a crucial compliance requirement under the Income Tax Act, 1961, and failure to obtain it can result in fines and legal consequences. Therefore, businesses and individuals dealing with TDS and TCS must apply for TAN and ensure timely tax deductions to avoid penalties.
TAN Registration Process
TAN registration is an essential process for businesses and individuals who are required to deduct Tax Deducted at Source (TDS) or collect Tax Collected at Source (TCS) as per the Income Tax Act, 1961. The process involves applying for a Tax Deduction and Collection Account Number (TAN), which is a 10-digit alphanumeric code issued by the Income Tax Department of India. The registration ensures that TDS or TCS deductions are recorded correctly and deposited with the government. Without a TAN, entities cannot process TDS or TCS payments, making compliance with tax regulations impossible.
To register for TAN, applicants must first visit the official NSDL website (now Protean e-Gov Technologies Limited) and access Form 49B, which is the designated application form for obtaining TAN. The form requires essential details such as the name of the applicant (individual, business, or entity), PAN details, category of deductor, and address information. Accuracy in filling out this form is critical, as any errors can lead to rejection or delays in processing.
Once the form is correctly filled out, applicants must submit it online through the NSDL portal or physically at a TIN Facilitation Center (TIN-FC). A nominal processing fee of ₹65 (₹55 application charge + 18% GST) is required, and payment can be made via credit/debit card, net banking, or demand draft. After successful submission, the system generates a 14-digit acknowledgment number, which serves as a reference to track the status of the application.
The Income Tax Department verifies the details, and once the application is approved, the TAN is allotted to the applicant. The number is sent via email and physical mail to the registered address, typically within 5-7 working days. In cases where discrepancies arise, the applicant may be asked to provide additional documents or correct errors before the TAN is issued.
Once received, the TAN must be used for all TDS/TCS-related transactions, including tax deductions on salaries, contractor payments, rent, and professional fees. It must be quoted in TDS/TCS payment challans, return filings, and certificates issued to employees or vendors. TAN is valid for a lifetime, and there is no need for renewal. However, if there is a change in business details, address, or incorrect details in the TAN, applicants must file for TAN correction or modification through the NSDL portal.
By following the TAN registration process correctly, businesses and individuals ensure compliance with Indian tax laws, avoid penalties, and streamline their TDS/TCS filing procedures effectively.
Silent Features
Mandatory for TDS/TCS Transactions
10-Digit Unique Code
Applicable to Businesses & Organizations
Essential for TDS Returns
Lifetime Validity
Issued by NSDL on Behalf of the IT Department
Advantages of TAN Registration
- Ensures Legal Compliance: Avoids penalties and legal issues by enabling proper tax deduction and collection.
- Smooth Processing of TDS/TCS Payments : Mandatory for depositing TDS and filing returns without issues.
- Prevents Higher Tax Deductions: Without TAN, businesses may face higher tax deductions or penalties.
- Simplifies Financial Transactions: Helps streamline tax deductions for salaries, contracts, rent, and professional fees.
- Allows Easy Online Verification: TAN details can be easily verified and managed online for compliance.
- Avoids Penalty of ₹10,000: Non-compliance leads to hefty fines, making TAN registration crucial for businesses.
Documents Required
PAN Card
Aadhaar Card
Bank Statements
Firm incorporation certificate
signature of the applicant
Address Proof
Step-by-Step Guide For TAN Registration
Here are 5 steps to complete your TAN Registration
Step 1
Visit the Official NSDL Website
Step 2
Fill Out Form 49B
Step 3
Submit the Application and Pay the Fee
Step 4
Send the Signed Application (If Required)
Step 5
Receive TAN and Start Using It
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