What Is TAN: Structure & How to Apply for TAN?

Individuals or businesses making salary payments are mandated to deduct tax. To deduct tax and file returns, you need a TAN. So, what is TAN? TAN stands for Tax Deduction and Collection Account Number. It is related to deduction or collection of tax at source. PAN is different from TAN and cannot be used interchangeably. Everyone must have PAN to file his/her IT returns whereas TAN is required only if you deduct TDS or collect TCS.

What is TAN?

As per the Income-tax Act, every person/firm making payment or crediting income of defined types has to deduct tax and deposit the sum so deducted with the government. All such persons/firms must possess a tax deduction account number (TAN).

TAN is a 10-digit alphanumeric number issued by the Indian Income Tax Department. TAN number is essential for filing TCS/TDS. The first 4 digits of the TAN are alphabets followed by a numeric 5-digit number and finally an alphabet. The first 3 alphabets denote the jurisdiction code, 4th alphabet is the initial of the name of the TAN holder who can be a company, firm, individual, etc. For example, the TAN allotted to Ramesh of Bangalore may appear as BLR R 12345 C.

Who Needs TAN?

In line with section 203A of the Indian Income Tax Act, 1961, every business or individual that deducts or collects tax at source should have TAN. Section 272BB(1) penalizes the business or individual if TAN is not obtained or applied for. Both government and non-government deductors are mandated to hold TAN. However, if you are deducting tax under section 194-IA, a TAN is not required. You may use PAN instead. TAN is not needed in cases where you deduct tax under sections 194-IB or 194M.

The income tax department also mandates quoting (wherever applicable) TAN in all TDS/TCS returns, payment challans and certificates that are issued. Non-compliance may attract a penalty as per applicable provisions. If TAN is not quoted, the returns filed will be declined and banks will not accept the challans for TDS/TCS deposits.

How to Apply for TAN?

You may apply, for a TAN, online or using a conventional, physical form. No documents are required to be enclosed with the application for TAN. The procedure applicable for each is listed below:

1. Offline

Form 49B should be filled (in duplicate) and submitted at any of the Tax Information Network (TIN) Facilitation Centres (FCs). TIN-FC addresses are available on the website of the National Securities and Depository Limited (NSDL)-TIN.

2. Online

Go to the NSDL-TIN website, complete form 49B and submit it. On submitting the online application, you will see an acknowledgement on the screen. The acknowledgement consists of a Unique 14-digit acknowledgement number, the status of the application, name, contact info, payment details and space for signature. After applying online, the acknowledgement that is generated after submitting the form must be sent to NSDL. Basis your application, NSDL will communicate the status to you at your registered communication address.

You are then required to pay a processing fee of Rs.55 + GST via demand draft/cheque/E-payment.

How to Use TAN?

A single TAN can/must be used for all types of deduction and collection. Different TANs are not required to deduct tax from different types of payments such as salary, interest etc. In line with the provisions of section 203A, quoting TAN is mandatory in TDS/TCS statements, accounts statements, challans for TDS/TCS deposits and TDS/TCS certificates.

Quoting TAN in all documents about TDS is mandatory. Correspondence, without TAN, with the IT department may not be entertained.

How to Check your TAN Number?

A step-wise flow is listed below to help you navigate the site to know your TAN number.

Step 1

Logon to https://www.incometax.gov.in/iec/foportal/

Step 2

Click on 'Know TAN Details' under 'Quick Links’

Step 3

Search using the name or TAN number. Choose the category and state. Enter the mobile number

Step 4

Click 'Continue' to receive the OTP on the entered mobile number

Step 5

Enter the OTP and click on 'Validate' to view the TAN details

Digitisation has eased the process of applying for TAN and filing returns. You can submit TAN Applications and TDS returns online. Filing TDS returns on time helps the government prevent people from evading taxes. The IT department keeps track of the TDS return and whether an income tax assessee has disclosed the income in their IT return or not. When the TDS return is filed by the deductor then the deductees will get the credit of tax paid by the deductor in their income tax return.

Disclaimer: This article is issued in the general public interest and meant for general information purposes only. Readers are advised to exercise their caution and not to rely on the contents of the article as conclusive in nature. Readers should research further or consult an expert in this regard.