What is TAN?
TAN stands for Tax Deduction and Collection Account Number. It is a unique 10-character alphanumeric identifier issued to entities responsible for deducting or collecting tax at source (TDS/TCS) under the Indian Income Tax Act, 1961. The TAN is mandatory for organizations or individuals who are required to deduct or collect taxes on specific payments made during business operations.
Key Features of TAN:
Structure:
The TAN consists of 10 characters, where the first four are letters, the next five are numeric digits, and the last is a letter (e.g., ABCD12345E).
Purpose:
The TAN ensures proper tracking of tax deductions and collections made by businesses and individuals.
Mandatory Usage:
It must be quoted in all TDS/TCS-related filings, such as returns, challans, and certificates.
Penalties:
Failure to obtain or quote TAN where required can result in penalties under Indian tax laws.
How to Obtain TAN?
Applicants can apply for a TAN through the NSDL (National Securities Depository Limited) or TIN (Tax Information Network) websites by submitting Form 49B.
When is TAN Required?
When deducting tax on salaries, contractor payments, rent, professional fees, etc.
When collecting tax at source on specified transactions.
TAN is a critical component of India’s taxation system, ensuring compliance and transparency in tax-related activities.