Tuesday 05 December 2023

Who Needs TAN Number & How to Apply for it?

TAN Number

Tax Deduction and Collection Account Number, or TAN is 10-digit alphanumeric code, which is to be mandatorily quoted on TDS (Tax Deduction at Source) returns.

If you are a citizen of India, who is responsible to deduct or collect tax, it is necessary for you to know your TAN. As mentioned under Section 203A of the Income Tax Act of 1961, any individual or business enterprise liable to pay tax must obtain this 10-digit number.

As an alphanumeric identifier, the TAN number has a unique sequence. The first four characters are letters, followed by five numbers and a letter at the end.

Here is what these characters represent –

  • The initial three letters denote the jurisdiction from which the TAN was issued.
  • The 4th letter stands for the initial letter of a particular individual or entity’s name.
  • The next six characters (including the five numerals and one letter) are random and system-generated.

As regulated by Section 272BB under the Income Tax Act, not obtaining or quoting TAN in official documents such as TDS/TCS certificates or any other documents required during Income Tax audit in India can lead to a penalty of up to Rs.10,000.

It is mandatory to know your TAN and quote it in the following documents –

  • TDS and TCS (Tax Collected at Source) statements.
  • Challan for the payment of TDS or TCS returns.
  • TDS or TCS certificates.
  • Statements of various financial transactions or accounts.

It is essential for individuals to know what is TAN number meaning and how it can help. Financial institutions can refuse to accept challans for TDS or TCS payment if TAN is not quoted in it.

TAN applications can be of two types –

  • Application for generating new TAN.
  • Application to rectify or change any data in an already obtained TAN.

Indians can apply for TAN online as well as offline. To apply and know your TAN offline, you need to visit the nearest TIN Facilitation Centre and make the application on Form 49B.

How to apply for TAN online?

In order to apply for your Tax Deduction and Collection Account Number online, you need to follow the mentioned steps-

  1. Log on to the official website of NSDL (National Securities Depository Limited).
  2. Choose ‘TAN’ among the options available under the ‘Services’ dropdown.
  3. Click on the option ‘Apply online’.
  4. Select the option reading ‘New TAN’.
  5. In the next page, choose from the list of ‘Categories of Deductors’ and click the ‘Select’ option.
  6. After that, you will be redirected to the page containing Form 49B.
  7. Fill in the form with proper details and then click ‘Submit’.
  8. After the confirmation, an acknowledgement screen will be displayed.
  9. Save the acknowledgement form and take a printout copy of the form.
  10. The printout of the acknowledgement form with other mandatory documents needs to be sent to the NSDL office.

Once you have successfully submitted the application for TAN number, you can check the application status after three days by using the acknowledgement number.

TAN will be required during the income tax audit under Section 44AA, 44AB, 44AD, 44AE, and 44ADA. As responsible taxpayers, you must keep such accounts and documents up-to-date.

Keeping all the tax-related papers organised and up-to-date can also benefit you in other aspects, such as it helps you when you are looking to borrow a personal loan or business loan.

It establishes your image as a financially-responsible citizen and thus enables financial institutions to trust you. Bajaj Finserv, a well-known NBFC, provides exclusive features with their Business Loans to their customers.

If you who have recently set up a business or started earning and do not know your TAN yet, make sure to apply for it without delay. Once that is done, you can look for the different tax-saving tips for small business owners.