Tax Deduction and Collection Account Number (TAN) is a 10-digit alphanumeric number assigned by the Income Tax Department of India to entities who are responsible for deducting or collecting tax at source. TAN is required to be quoted on all TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) returns, certificates, and other documents.
In this blog, we will discuss what TAN is, who needs it, how to apply for it, and other important details related to TAN.
What is TAN?
TAN is a unique identification number assigned by the Income Tax Department to entities who are responsible for deducting or collecting tax at source. It is a 10-digit alphanumeric number that is required to be quoted on all TDS and TCS returns, certificates, and other documents.
Who needs TAN?
TAN is required by entities who are responsible for deducting or collecting tax at source. This includes individuals, firms, companies, and other entities who are required to deduct or collect tax at source as per the Income Tax Act, 1961.
Some of the entities who are required to obtain TAN include:
- Employers who deduct TDS on salaries
- Banks who deduct TDS on interest payments
- Purchasers who are required to deduct TDS on purchase of immovable property
- Sellers who are required to collect TCS on sale of certain goods or services
- Any other person who is required to deduct or collect tax at source as per the Income Tax Act, 1961
How to apply for TAN?
Entities who are required to obtain TAN can apply for it online or offline.
Online application: The online application can be made on the NSDL website or the UTIITSL website. The applicant is required to fill the online form, make the payment, and submit the necessary documents.
Offline application: The offline application can be made by submitting the Form 49B to any TIN-FC (Tax Information Network – Facilitation Centre) or TIN-NSDL office. The applicant is required to fill the form, make the payment, and submit the necessary documents.
The necessary documents include proof of identity, proof of address, and proof of the entity’s existence.
What are the fees for obtaining TAN?
The fees for obtaining TAN are Rs. 65 for online application and Rs. 55 for offline application. The fees can be paid online or offline.
What are the consequences of not obtaining TAN?
Entities who are required to obtain TAN but fail to do so may be liable to pay a penalty of Rs. 10,000. In addition, the entity may not be able to file TDS or TCS returns, issue TDS or TCS certificates, or conduct other TDS or TCS related transactions.
Validity of TAN
TAN is valid for the lifetime of the entity unless it is surrendered or cancelled by the Income Tax Department. However, entities are required to file TDS and TCS returns regularly to ensure the validity of TAN.
Modification of TAN
In case of any changes in the entity’s name, address, or other details, the entity must apply for modification of TAN. The modification can be made online or offline by submitting the necessary documents and paying the applicable fees.
Usage of TAN
TAN must be quoted on all TDS and TCS returns, certificates, and other documents related to TDS and TCS. Failure to quote TAN may result in penalties and other consequences.
Penalties for non-compliance
Entities who do not deduct or collect tax at source, or who deduct or collect tax at a lower rate than prescribed, may be liable to pay penalties and interest. In addition, entities who do not file TDS or TCS returns on time may also be liable to pay penalties and interest.
In addition to the above information, there are some other important aspects of TAN that taxpayers should be aware of:
- Duplicate TAN
Taxpayers should avoid applying for duplicate TAN as it is illegal and may attract penalties. In case taxpayers already have multiple TANs, they must surrender the extra TANs to the Income Tax Department.
- TAN Correction
Taxpayers can correct their TAN details in case of any mistakes or errors. To make any corrections in the TAN details, taxpayers must file a request for TAN correction with the Income Tax Department.
- Importance of TAN
TAN is an essential document for all taxpayers who are responsible for deducting or collecting tax at source. The TAN number ensures smooth TDS and TCS transactions, and non-compliance may lead to penalties and legal issues.
- TDS and TCS Payment
After deducting or collecting tax at source, taxpayers are required to deposit the TDS and TCS amount to the government within the prescribed due date. Non-payment or late payment of TDS or TCS may result in penalties and interest.
- TAN Cancellation
TAN may be cancelled by the Income Tax Department if it is found that the entity is not complying with TDS or TCS provisions. Taxpayers can also voluntarily surrender their TAN if they are no longer required to deduct or collect tax at source.
Conclusion
TAN is a unique identification number assigned by the Income Tax Department to entities who are responsible for deducting or collecting tax at source. Entities who are required to deduct or collect tax at source must obtain TAN and quote it on all TDS and TCS returns, certificates, and other documents. Failure to obtain TAN may result in penalties and other consequences.
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Frequently Asked Questions (FAQ’s)
Q1.) What is TAN, and who needs to obtain it?
TAN stands for Tax Deduction and Collection Account Number, and it is a 10-digit alphanumeric code required by entities who are responsible for deducting or collecting tax at source.
Q2.) How long does it take to obtain TAN after applying?
The TAN is typically issued within a few weeks after the application is submitted.
Q3.) Is TAN valid for a lifetime, or does it expire after a certain period?
TAN is valid for the lifetime of the entity, unless it is surrendered or cancelled by the Income Tax Department.
Q4.) What happens if an entity does not obtain TAN?
Entities who are required to obtain TAN but fail to do so may be subject to penalties and legal consequences.
Q5.) Can TAN be modified if the entity’s details change?
Yes, entities can apply for modification of TAN if there are any changes in the entity’s name, address, or other details.
Q6.) Can TAN be cancelled if an entity is no longer required to deduct or collect tax at source?
Yes, entities can surrender their TAN if they are no longer required to deduct or collect tax at source.
Q7.) Can an entity apply for multiple TANs?
No, entities should only apply for one TAN. Applying for multiple TANs is illegal and may attract penalties.
Q8.) What are the consequences of non-compliance with TAN-related provisions?
Non-compliance with TAN-related provisions may lead to penalties, interest, and legal consequences. It is important for entities to comply with TDS and TCS provisions and use TAN correctly to avoid such consequences.
