Definition of TAN
- Also known as the TAN, tax deduction account number, is a ten digit alphanumeric number that is issued by the Income Tax Department. The first 4 components of the TAN are alphabets, the next 5 are numbers and the last is an alphabet.
- First 3 alphabets of TAN represent 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, DEL R 12345 J, is the TAN belonging to Ms. Rohini of Delhi.
- Persons who are responsible for paying tax at source (TDS) or who are required to collect tax at source (TCS) need to have this number.
- Also, a person required to deduct tax under Section 194-IA of the Income Tax Act can use PAN in place of TAN.
Importance of TAN
- The TAN number must be mandatorily written in documents mentioned under Section 203A of the Income Tax Act. The documents are – TDS statements, TCS statements, Statement of financial transactions/reportable accounts, Challans for payment of TDS/TCS, TDS/TCS certificates and other relevant documents as prescribed.
- There exists a penalty for failure to obtain TAN and also for incorrectly quoting the TAN. The amount can go up to Rs. 10,000.
Procedure for Obtaining TAN
- One can get his or her TAN through online or offline mode. In the former, an application must be made on NSDL-TIN website. In case of an offline mode Form 49B must be filled in duplicate and submitted to any TIN-FC. The form is freely downloadable on http://www.incometaxindia.gov.in.
- There is a nominal processing fee involved in getting the TAN which can be paid via a demand draft, cheque or through online mode.
- The authority responsible for allotting the TAN is the Income Tax Department and NSDL will
- intimate TAN to the applicant thereafter. One can even track the status of his or her application online.
Some Important Points to Keep in Mind
- A single taxpayer can hold only one TAN.
- PAN cannot be quoted in place of TAN.
- Changes in the data submitted to the department must be submitted so that it can be reflected in the records.
- If the applicant is a company which is not registered under the Companies Act, then the application is to be made in the form of Form INC 32 specified in Section 7 (1) of the Companies Act.
