Tax Deduction and Collection Account Number (TAN)
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Meaning
TAN refers to ‘Tax Deduction and Collection Account Number’. Individuals or organisations in India that are mandated to withhold or collect taxes on behalf of the government are required to obtain this number from the Income Tax Department of India. It is a unique identification number of ten digits consisting of alphanumeric characters.
The TAN is most commonly utilised for the purposes of tax deduction or collection at the source (TDS/TCS). It is required that specified persons such as companies, employers and other deductors, obtain a TAN and cite it on all TDS or TCS returns, challans, and other related papers. Among these entities are those that deduct from their employees’ paychecks.
The Income Tax Department is able to better track and monitor the tax deductions and collections made by a variety of businesses with the assistance of TAN. It gives the department an ability to keep records of tax payments and helps in ensuring that tax requirements are followed.
When deducting taxes at the source or collecting taxes from customers, the entity that holds a TAN is required to deduct the applicable tax amount and deposit it with the government within the specified time period. If you fail to obtain a TAN or fail to cite it correctly on any essential document, you may be subjected to fines or other legal consequences.
It is essential to keep in mind that a TAN is not the same thing as a PAN (Permanent Account Number). While a taxpayer’s personal identification number, or PAN, serves as their unique identifier for income tax reasons, a is used specifically for tax deduction and collection activities.
Benefits
- Legal conformity: Possessing a TAN guarantees legal conformity with the requirements outlined in the Income Tax Act of 1961. Those entities that are required to deduct or collect tax at the source are required to get a TAN and include it on the documents that are relevant to their situation.
- Tax Deduction and Collection: The Tax Deduction and Collection Number (TAN) provides companies with the ability to deduct or collect tax at the source in accordance with the established rates and rules. It ensures that the necessary tax amount is deducted or collected, and that sum is afterwards deposited with the government within the stipulated period.
- Distinct Identification: In order to facilitate either the deduction or collection of taxes, the TAN assigns a one-of-a-kind identification number to each organisation. It helps to differentiate one entity from another, and makes it easier to track and monitor the tax deductions and collections made by various entities.
- Streamlined Tax Procedures: The TAN helps to streamline the procedure of tax deduction or collection at the source. It makes it simpler for the Income Tax Department to balance tax payments and issue applicable certificates by providing a standardized structure for reporting TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) transactions.
- TDS Certificates: Organisations that are in possession of a TAN are obligated to provide deductees with TDS certificates, which contain information regarding the tax that was withheld from their earnings. These certificates are necessary for the individuals who are eligible to claim a credit for the tax that was withheld from their paychecks when they file their income tax returns.
- Online Filing and Verification: The TAN enables organisations to file TDS or TCS returns online through the e-filing portal of the Income Tax Department. In addition to this, it allows for the online verification and adjustment of TDS or TCS statements, which makes the procedure effective and comfortable.
- Monitoring of Tax Compliance: The TAN provides assistance to the Income Tax Department in the process of monitoring the various entities’ compliance with tax laws. It assists in identifying defaulters or entities that are not complying with the rules for tax deduction or collection, thus enabling the department to take appropriate action, if necessary.
What is included in this
FAQs
A TAN is a ten-digit number that is required to be obtained by an entity responsible for deducting or collecting tax at source. This number is provided by the Income Tax Department. It is utilised for the purpose of complying with the prerequisites for tax deduction and collection.
All Entities, that make payments on which tax can be deducted or collected at the source are obliged to get a TAN. This include individuals, businesses, government departments, and other types of organisations.
In order to submit an application for a TAN, you will need to complete out Form 49B, which may be found either on the official website of the Income Tax Department or at authorized TIN Facilitation Centers. The application can be submitted either online or through hard copy.
Proof of identification, proof of address, and a copy of the PAN card or the PAN allocation letter are needed.
There are distinct differences in the roles that TAN (Tax Deduction and Collection Account Number) and PAN (Permanent Account Number) play. A TAN is employed particularly for the purposes of tax deduction and collection at the source, whereas a PAN is a unique identity number used for various financial transactions and income-tax related activities.
If a TAN is no longer needed, it is possible for the card to be cancelled. In order to give up a TAN, an application must be presented to the relevant Assessing Officer in the prescribed manner. Following the completion of the verification, the TAN will be deleted.
No, the TAN is issued solely for the purposes of tax deduction and collection operations. It cannot be used for any other operations under any circumstances.
In case a TAN has already been allotted, no separate application needs to be made for obtaining TAN. The same number can be quoted in all returns, challans and certificates for TCS.
The employer will be liable for penalty under the relevant section of the Income Tax Act, 1961 for failure to obtain and/or quote TAN. Further, the employer will not be able to deposit TDS (if deducted) and will also not be able to file TDS statement for the same. If your salary is in a taxable bracket and your employer has not deducted TDS, you may have to pay self-assessment tax and/or advance tax as applicable.
It is a good practice to verify the TAN of anyone who deducts tax from source (known as TDS) on your behalf. Refer to your Form 16/16A/26AS, and you will see the TDS details for the financial year. Using the Know TAN Details service, you can verify if the amount was deducted by the right person. In addition, you need to quote the TAN when filing your income tax returns in case of any TDS.
