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TAN (Tax-Deduction Account Number)

TAN i.e. Tax-Deduction Account Number  is issued by the Income Tax Department on the lines of a PAN card in India. It is mandatory to have a PAN card to apply for TAN online. But the only difference is that the Tax Deduction Account Number is not issued to everyone, only issued to individuals, companies or firms who deduct or collect tax on behalf of the Income Tax Department. For example: As TDS is deducted by the entrepreneur or company on the salary paid to its employees, then the company will be called a deductor and the employee whose TDS is deducted will be called a deductee. In such a situation, since the company is deducting TDS on behalf of the income tax department, the company must have TAN.

Hence, applying for TAN becomes very important whenever an entrepreneur starts a business and employs a person as an employee. So that in the future he does not face any kind of trouble. Under Section 272BB(1) of the Income Tax Act 1961, if an eligible person, company, or firm does not obtain TAN, or quotes incorrect TAN, there is a provision for a fine of up to Rs. 10,000.

As mentioned in the first line that the full form of TAN is Tax Deduction Account Number but it is also known by many as Tax-Collection Account Number. Like PAN, a TAN is also made up of 10-digit letters and numbers i.e. Alpha Numeric Number. It is to be taken by all persons who deduct TDS from an individual or take TCS on behalf of Income Tax.

Structure of TAN:

Its first four digits are in alphabets, followed by five digits are digits, and the last digits are again in alphabets. The first three letters denote the jurisdiction of the Income Tax Department i.e. city and state, the fourth letter denotes the first letter of the name of a company, firm, or individual. The following five digits and one character help to make a TAN unique.

For example, for Mr. Rakesh who is from Delhi, his TAN will be something like this – Dell R00001E.

Mandatory to Quote TAN:

Section 203A also makes it mandatory to quote TAN in following documents:
(a) TDS statements i.e. return

(b) TCS statements i.e. return

(c) Statement of financial transactions or reportable accounts

(d) Challans for payment of TDS/TCS

(e) TDS/TCS certificates

(f) Other documents as may be prescribed

Who can require a TAN number?

TAN can be required for all those entities of business who pay salary to their employees or give commission to any individual, firm, or company. Such as;

  • Central / State / Local Authority
  • statutory autonomous body
  • Company/Company Branch/Division
  • Individual / Hindu Undivided Family (Karta)
  • Branches of Sole Proprietorship Businesses |
  • Association of Persons/Firm/Trust
  • It is very important to keep the following things in mind before applying to TAN online:
  • The applicant must have a PAN card.
  • If the applicant already has a TAN, then the person should not apply, as it is illegal to have two TANs.
  • If a person wants to make corrections in TAN, then he can do this process online by visiting this link.
  • If an individual/entrepreneur has more than one TAN then he should use any one TAN that he is already using. and other cancellation requests should be sent to Income Tax Department. TAN cancellation form can be downloaded from the NSDL website.

TAN Online Application Process:

Standing in line in front of offices to complete government work is not a new thing in India. There are still many such procedures in which a person has to stand in line for hours and wait for his number. The same was done for applying TAN (Tax Deduction Account Number). But now the good news is that an entrepreneur can also apply for TAN online.

The introduction of the TAN online application facility does not mean that it cannot be applied through offline mode but the individual/entrepreneur can apply offline also if you want. But when this work can be done online sitting at home, why would anyone want to visit the office of NSDL (National Securities Depository Limited). There are some steps to be followed to apply for TAN online:

Step 1: Firstly, the individual/entrepreneur has to go through the NSDL website and read the guidelines related to filling out the TAN online form.
Step 2: After that Individual or Entrepreneur can read the instructions related to the registration. Now if the individual or entrepreneur has read the guidelines and instructions to apply online TAN, then the next step is to visit this NSDL page and fill out Form 49B for TAN application.

Step 3: The payment to apply TAN online: The individual or entrepreneur has to pay only Rs 63 for applying TAN.

Various options are given by NSDL to make this payment. If the individual or entrepreneur is willing to pay in offline mode then he can pay this amount in the form of cash by visiting the TIN Facilitation Center.

 Payment can also be made through Demand Draft or Cheque, Check or Demand Draft should be in the name of “NSDL-TIN”. Tatkal payment can be done through credit card, debit card or net banking.

Step 4: Once the payment is done, an acknowledgment receipt will be shown to the applicant, mentioning the 14-digit acknowledgment number, name of the applicant, contact and payment details, etc. Applicants should save that receipt on their computer and take a printout of it and send it to the given address of NSDL duly signed. That document should reach the address given by NSDL within 15 days of applying TAN online.

Step 5: Lastly, the applicants who have made the payment using Net Banking/ Debit Card/ Credit Card; their TAN will be sent over e-mail in about five days. However, the TAN allotment letter will be issued to the applicant “Karta” only when the signed acknowledgment receipt reaches the concerned office.

Note: Online TAN status can also be tracked through the website of NSDL.

Our experts at Legal Vidur help you with services related to PAN, TAN, renewal tax returns, and many more. Visit our site and get your certificate within 5-10 days.

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