Tax Deduction And Collection Account Number (TAN)

Understanding Tax Deduction and Collection Account Number (TAN) in India

TAN is a unique alphanumeric code issued by India's Income Tax Department to entities responsible for deducting or collecting tax at source, used for reporting and remitting TDS and TCS to the government.

1. Purpose:

TAN is primarily used to track and administer tax deducted or collected at source by various entities. 

It helps in linking TDS and TCS deductions to specific entities for tax compliance and reporting purposes.

2. Format:

TAN is a ten-character alphanumeric code, typically in the format "AAAA99999A," where:

  The first four characters are letters (from A to Z).

  The next five characters are numbers (from 0 to 9).

  The last character is a letter (from A to Z), which is a checksum digit used for verification purposes.

3. Application and Issuance:

Entities required to deduct or collect tax at source, such as employers, companies, government departments, banks, and other entities, need to apply for TAN through Form 49B.

TAN applications can be submitted online through the Income Tax Department's website or offline through authorized TIN facilitation centers.

Upon verification of the application and supporting documents, the Income Tax Department issues a unique TAN to the entity.

4. Importance:

TAN is mandatory for entities responsible for deducting or collecting tax at source on various transactions. 

It is used to identify and track TDS and TCS deductions made by the entity.

TAN is required to be quoted on TDS/TCS returns, TDS/TCS certificates, and other relevant documents filed with the Income Tax Department.

5. Validity:

TAN is a permanent and lifelong identification number, which remains unchanged even if there are changes in the entity's name, address, or other details. 

However, changes in TAN-related information need to be updated with the Income Tax Department through the prescribed procedures.

6. Compliance:

Entities with TAN are required to deduct or collect tax at source as per the applicable rates and rules prescribed under the Income Tax Act.

They must file TDS/TCS returns, issue TDS/TCS certificates to deductees, and remit the deducted or collected tax to the government within the specified due dates.