Businesses and individuals responsible for deducting or collecting tax at source (TDS/TCS) are required by law to obtain a Tax Deduction and Collection Account Number (TAN). This 10-character alphanumeric number is issued by the Income Tax Department of India and is essential for complying with TDS-related obligations.
Whether you operate as a company, partnership firm, proprietorship, or are an individual deducting TDS on a one-time transaction, obtaining a TAN is a crucial part of meeting your tax compliance responsibilities.
This article explains what TAN is, why it matters, and how to apply for it in a step-by-step manner.
What is TAN?
TAN stands for Tax Deduction and Collection Account Number. It is a unique 10-digit alphanumeric identifier (e.g., MUMT12345B) allotted to entities required to deduct or collect tax at source.
TAN is mandatory for:
- Deducting TDS (Tax Deducted at Source)
- Collecting TCS (Tax Collected at Source)
- Depositing the deducted or collected amount with the government
- Filing TDS/TCS returns
- Issuing TDS certificates (such as Form 16, 16A) to recipients
Why TAN is Essential for Businesses
🔹 1. Legal Requirement
If a business makes payments such as salary, rent, contractor fees, or professional charges that are subject to TDS, it must deduct tax and remit it using a valid TAN.
🔹 2. TDS/TCS Return Filing
Quarterly returns related to TDS or TCS cannot be filed without quoting TAN. Failing to do so may lead to non-compliance penalties.
🔹 3. Issuance of TDS Certificates
TAN must be mentioned in TDS certificates issued to payees. These serve as proof of tax deducted and deposited.
🔹 4. Avoiding Penalties
Failure to apply for TAN, or quoting an incorrect TAN in returns, may result in a penalty of ₹10,000 under Section 272BB of the Income Tax Act.
Who is Required to Obtain TAN?
TAN must be obtained by the following entities:
- Companies (Private/Public Limited)
- Partnership firms and LLPs
- Sole proprietors
- Government departments
- Trusts and non-profit organisations
- Individuals deducting TDS on high-value property transactions (over ₹50 lakhs)
Even individuals who deduct TDS for a single transaction (e.g., property purchase) may be required to obtain TAN, unless exempted (e.g., via Form 26QB where PAN is accepted).
How to Apply for TAN – Step-by-Step Guide
TAN can be applied for online via the NSDL (now Protean) TIN portal or offline through a designated facilitation centre.
🔹 Option 1: Online Application (Preferred Method)
Step 1: Visit the official NSDL portal
👉 https://www.tin-nsdl.com
Step 2: Select Form 49B for TAN application
Step 3: Fill in the required details:
- Applicant type (Company, Individual, Firm, etc.)
- Name, address, and contact information
- Nature of business
- PAN (optional but recommended)
Step 4: Submit the form and note the 15-digit acknowledgement number
Step 5: Pay the fee of ₹77 (₹65 application fee + 18% GST) via net banking, debit card, UPI, etc.
Step 6: Upon successful processing, TAN will be issued and shared via email and post
🔹 Option 2: Offline Application
- Download Form 49B from the NSDL website
- Fill in the form manually
- Submit it to the nearest TIN-Facilitation Centre (TIN-FC)
- Pay the required fee
- You will receive a receipt, and TAN will be issued after verification
TAN Structure
TAN is a 10-character alphanumeric code formatted as:
AAAA12345A
- First 4 characters: jurisdiction code
- Next 5 characters: numeric sequence
- Last character: alphabetic check code
Things to Keep in Mind
- TAN and PAN are different; PAN is for income reporting, TAN is for TDS compliance
- Quoting TAN is mandatory in all TDS/TCS-related filings and documents
- Even if no tax is deducted in a quarter, TDS returns must be filed (nil return)
- Delay or failure in TDS deposit may attract interest, late fees, and penalties
- If you have any further questions or need assistance, feel free to reach out to us at admin@ushmaassociates.com or info@nricaservices.com, or contact us via call/WhatsApp at +91 9910075924.
Stay Updated, Stay Compliant!
Disclaimer: Aim of this article is to give basic knowledge about the topic to people who are not in touch with Indian tax norms. When anybody is dealing with these kinds of cases practically, he shall consider all relevant provisions of all applicable Laws like FEMA/Income Tax/RBI /Companies Act etc.