What is TAN?

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Introduction

In India, the Income Tax department of the Central Government assigns a 10-digit alphanumeric number known as the Tax Deduction and Collection Account Number (TAN) to individuals or entities responsible for collecting tax at source (TCS) or deducting tax at source (TDS). TAN plays a critical role in the country’s tax compliance system, and taxpayers must quote it on all TDS returns filed under Section 203A of the Income Tax Act of 1961.

Full Form of TAN:

TAN stands for Tax Deduction and Collection Account Number.

This number is unique to each person or organization responsible for TDS/TCS and helps track tax payments, filings, and documentation effectively.

TAN Number Structure and Meaning

The TAN is a 10-digit unique identifier that follows a specific structure:

First 3 Alphabets: Represent the jurisdiction code (i.e., the region or city where the entity is registered).
4th Alphabet: Represents the first letter of the holder’s name.
Next 5 Numbers: These are unique digits identifying the individual or organization.
Final Alphabet: Serves as a unique identifier to the entire TAN.

For example:

RAJM99999B:

“RAJ” indicates Rajasthan jurisdiction.
“M” refers to the first letter of Mr. Mahesh’s name.
“99999” is a unique number.
“B” is the final identifier.

DELX12345M:

“DEL” indicates Delhi jurisdiction.
“X” refers to XYZ Pvt Ltd.
“12345” is a unique number.
“M” is the final identifier.

Relevance of TAN

The TAN is essential for various tax-related processes, such as:

Filing TDS/TCS Returns: Without a TAN, you cannot file these returns.
Payment of TDS/TCS: TAN is mandatory to procure challans for tax payments.
Issuing TDS/TCS Certificates: TAN must be quoted to issue certificates.
Submitting IT-Related Forms: Many tax-related forms require TAN for submission.

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What Happens if TAN is Not Quoted?

Failure to obtain or correctly quote TAN can lead to penalties under Section 272BB of the Income Tax Act:

Section 272BB(1): Penalty for failing to quote TAN.
Section 272BB(2): Penalty for quoting an incorrect TAN.
The penalty may be as high as ₹10,000.

Types of TAN Applications

There are two types of TAN applications:

Application for Issuance of New TAN: For individuals or firms needing a new TAN.
Application for Correction in TAN: For correcting or updating details in an already issued TAN.

How to Obtain TAN

You can apply for TAN via two methods: Online and Offline.

Online Method:

Visit the Official NSDL Website: Go to the NSDL-TIN website.
Register Yourself: Fill in all necessary details on the registration page.
Acknowledge Details: After submitting, an acknowledgment page with a 14-digit unique number will appear. Print and save this for reference.
Make Payment: The application fee is ₹55 + 18% GST. Payment can be made through multiple channels (Net banking, Credit/Debit Cards, etc.).

Offline Method:

Obtain Form 49B: Taxpayers can download this form from the IT Department’s website or obtain it at a TIN-FC center.
Fill and Submit Form 49B: Submit the form to the nearest TIN-FC center. No supporting documents are required for offline applications.

Checking the Status of Your TAN Application

To check the status of your TAN application:

Visit the official NSDL-TIN portal.
Select the Know Status of Application option.
Enter your 14-digit acknowledgment number and the status will be displayed.

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How to Search for Your TAN?

If you’ve misplaced your TAN, follow these simple steps:

Visit the IT Department’s Website.
Select Know Your TAN.
Choose TAN Search and input the necessary details (Name, Category of Deductor, State, etc.).
Receive an OTP on your registered mobile number to validate your identity.
View your TAN details on the next page.

TAN vs PAN: Key Differences

Although the Income Tax Department issues both TAN and PAN, each serves a different purpose:

PAN (Permanent Account Number): Required by individuals for all financial transactions, including filing returns.
TAN (Tax Deduction and Collection Account Number): Specifically required for individuals or organizations deducting or collecting tax at source.

Parameter	TAN	PAN
Issued To	Tax Deductors/Collectors	Every taxpayer (individual, firm, etc.)
Purpose	TDS/TCS filing and payment	All financial transactions and returns
Form for Application	Form 49B	Form 49A (individual) / Form 49AA (foreigners)
Penalty for Non-Compliance	₹10,000	₹10,000 for non-quotation

Conclusion

The Tax Deduction and Collection Account Number (TAN) is crucial for tax compliance in India. It ensures smooth tax filing and payment processes for individuals or firms responsible for deducting or collecting taxes at source. Obtaining and quoting your TAN number correctly is essential for avoiding penalties and ensuring timely tax documentation.

If you’re a tax deductor or collector, ensure you apply for a TAN through the proper channels and keep it updated to avoid any legal complications.

Frequently Asked Questions

What is TAN used for?

TAN is used for filing TDS and TCS returns, making tax payments, and issuing tax certificates.

How can I apply for TAN?

You can apply for TAN online via the NSDL-TIN website or offline by submitting Form 49B at a TIN-FC center.

Is it mandatory to quote TAN on tax-related documents?

Yes, TAN must be quoted when filing TDS/TCS returns, submitting certificates, and making tax payments.

What happens if I don’t quote TAN?

If you fail to quote TAN or quote it incorrectly, a penalty of up to ₹10,000 can be imposed.

Can a TAN be corrected?

Yes, if there’s a mistake in your TAN, you can apply for correction through the NSDL-TIN website.

How much is the TAN application fee?

The fee for applying for a new TAN online is ₹55 + 18% GST.

What is the difference between TAN and PAN?

TAN is for tax deductors/collectors, while PAN is required for all individuals and entities for financial transactions and tax returns.

Can I search for my TAN online?

Yes, you can search for your TAN using the Know Your TAN option on the official Income Tax Department website.

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