Tax Deduction and Collection Account Number: Everything You Should Know

As a first-time taxpayer, you may find the concept overwhelming, specifically when it comes to documentation and IDs. The Income Tax Act, of 1961 has several rules and regulations requiring taxpayers to verify their identity for tax purposes. Besides taxpayers, people who collect or deduct taxes also require such verification credentials.

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Table Of Contents

Components of Tax Deduction and Collection Account Number

Importance of TAN

Who Has to Apply for Tax Deduction and Collection Account Number

How to Obtain Tax Deduction and Collection Account Number

Most Asked Questions

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Tax Deduction and Collection Account Number (TAN) refers to a unique ten-digit alpha-numeric number every person deducting or collecting tax needs to obtain from the Income Tax Department (ITD). Section 203A of the Income Tax Act mandates quoting TAN on all TDS statements. Deductors can find TAN on the official website (www.incometaxindia.gov.in) They should check the new TAN before it gets incorporated into their e-TDS statement. It prevents inconvenience while providing e-TDS statements.

For those who are in charge of deducting tax at source (TDS) on wages, interest, dividends, and other payments as determined by the Income Tax Department, TAN is a requirement. Those in charge of collecting tax at source (TCS) on specific transactions as mandated by the government must also have TAN. A person's TAN is a special identification number that aids in tracking and keeping track of their tax deductions and collections. It is employed in the filing of TDS/TCS returns, the issuance of TDS/TCS certificates, and the payment of TDS/TCS obligations. Form 49B must be submitted to any approved TIN (Tax Information Network) facilitation centre or NSDL (National Securities Depository Limited) e-Gov TIN-FC in order to receive TAN. Following application processing, the Income Tax Department assigns and notifies the applicant of their TAN.

Components of Tax Deduction and Collection Account Number

TAN is a mix of alphabets and numbers, including:

• Alphabets- First 4 components and the last one

• Numbers- The next 5 components after the first 4 alphabets

The first three alphabets represent the jurisdiction code, while the fourth alphabet is the initial of the holder (individual or company).

Importance of TAN

The following justifies the significance of the TAN number:

• Legal Compliance: In accordance with the Income Tax Act, 1961, a TAN number must be obtained by anyone who is in charge of withholding or collecting taxes at the source. Penalties and legal ramifications may arise from failing to obtain a TAN number or from quoting an erroneous TAN number.

• Tax Deduction and Collection: The individual or organisation that has gathered taxes at the source and credited the funds to the government's account is identified by their TAN number. The individual from whose tax has been withheld receives TDS certificates, which are also issued using the TAN number.

• Tax Payment: In order to make an online tax payment, a TAN number is required. It's also necessary for TDS return e-filing.

• Fraud Avoidance: The use of a TAN number lessens the likelihood of fraudulent TDS deductions and collections. It guarantees that only authorised individuals or organisations are deducting and collecting taxes.

Who Has to Apply for Tax Deduction and Collection Account Number

Any person responsible for deducting tax at source (TDS) or collecting tax at source (TCS) needs to have a TAN. Alternatively, they can use PAN instead of TAN when deducting tax under Section 194-IA of the IT Act. Here are the details of tax deductions under different sections:

Section 194IA: TDS for payments on transferring immovable property except agricultural land.

Section 194-IB: TDS at the rate of 5% from rent payments exceeding Rs. 50,000 per month/part of the month

Section 194M: TDS at the rate of 5% on the amount paid for contractual work, brokerage, or professional fees, commission (not being insurance commission as per section 194D) for an aggregate of such payments exceeding Rs. 50 lakhs in a financial year.

Section 194S: TDS for payments when transferring a “Virtual Digital Asset”.

Every person deducting or collecting tax at source must quote TAN in TDS statements, TCS statements, statements of financial transactions or reportable accounts, TDS/TCS certificates, challans for payment of TDS/TCS, and other documents as prescribed. Failing to apply for TAN or quote it in the specified documents can lead to a penalty of Rs. 10,000.

How to Obtain Tax Deduction and Collection Account Number

TAN can be applied through online or offline mode. With the online mode, you need to apply on the NSDL-TIN website. For the offline mode, you have to fill Form 49B in duplicate and submit it to any TIN-FC. You can download the form for free at http://www.incometaxindia.gov.in.

The process has nominal processing fees of Rs 55 + GST to be paid via a cheque, demand draft, or through online mode. Once you get the TAN, you will be intimated by the Income Tax Department and NSDL. Meanwhile, you can track the status of your application online.

No documents are to be given with Form 49B while applying for allotment of TAN. However, for an online application, you will have to forward the acknowledgement generated after filling up the online form to NSDL. Application is processed when the department receives a signed acknowledgement and realizes the payment.

Steps to Know and Obtain TAN Online

• Access the NSDL-TIN website and navigate to the "Register Yourself" page to appear. All required data needs to be uploaded here. All information needs to be uploaded accurately and without errors. 

• Following the successful submission of this data, an acknowledgement page will show up. There are a few crucial parts of this page that need to remain in place until a TAN is correctly assigned. 

• This acknowledgement page will include information such as an exclusive 14-digit acknowledgement number, your payment and contact information, the applicant's name and status, and space reserved for your signature.

• Print this acknowledgement page out. It is important that you store your TAN properly until you receive it.

• The applicant must sign in the designated place, making sure their signature stays in that location and does not extend to adjacent regions.

• There are also provisions for thumb impressions. But it needs to be confirmed and certified by authorised authorities, such as magistrates and commissioned officers.

Steps to Know and Obtain TAN Offline

For individuals who are not comfortable with internet processes, there is still an offline option available. Obtaining a copy of Form 49B and filling it out completely are prerequisites for submitting it to the closest TIN-FC centre.

Steps to Obtain Form 49B

Lack of information about this Form's availability is one issue that many applicants deal with. There are several ways to obtain Form 49B:

• The official website of the IT department offers a free download for it.

• Additionally, the Form is available for free at any TIN-FC location. 

• Lastly, NSDL centres accept any legible copies of this form.

• As soon as the request is processed, you will be able to access your TAN number after depositing this form with all required information. Note that while applying offline, no paperwork is required.

No documents are to be given with Form 49B while applying for allotment of TAN. However, for an online application, you will have to forward the acknowledgement generated after filling up the online form to NSDL. Application is processed when the department receives a signed acknowledgement and realizes the payment.

Steps to Check the Status of TAN 

Upon submission, the candidate will receive a 14-digit confirmation number. 

• Go to the official website. 

• Choose the "TAN" option. 

• Select the "Know Status of Application" option. 

• Choose the appropriate candidate type. 

• Provide the number of your acknowledgement. 

• Put in the captcha. 

• Click the "submit" option.

FAQ

Q1. Do you need different TANs to deduct different types of TDS?

No, you don’t need different Tax Deduction and Collection Account Numbers to deduct tax from different payments such as salary, interest, dividend, and commission. A single TAN suffices for all purposes.

Q2. Is a separate TAN required for the purpose of TCS?

If you already have a TAN for tax deduction at source (TDS), you do not need to obtain a separate one for tax collection at source (TCS). You can quote the same number in your returns, challans, and TCS certificates. However, you must submit a duly filled-in Form 49B and the application fees to obtain a TAN if it has not been allotted.

Q3. How is TAN different from PAN?

A special identifying number known as TAN is given to individuals who are withholding or collecting taxes at the source. PAN is a special number given to assesses such as people and businesses, for income tax returns and other financial activities.

Q4. Can I quote PAN instead of TAN?

No, you cannot quote PAN where TAN is required. If you deduct or collect tax at sources, you must apply for TAN sooner rather than later. However, the deduction of tax under section 194-IA is an exception where the deductor can use PAN in place of TAN.

Q5. Can I hold more than one TAN?

Holding more than one TAN is illegal. However, different divisions or branches of an entity may have separate TANs. In any other case, you should immediately surrender any additional TAN if allowed by mistake. You can request cancellation by filling “Form for changes or correction in TAN” available at the NSDL-TIN website or procured from TIN-FC.

Q6. What is a duplicate TAN?

A duplicate TAN is an additional TAN issued to a person who already has one. Since it is illegal to hold or use a duplicate TAN, you should surrender it immediately.

Q7. What if there are any changes in the data provided at the time of allotment of TAN?

If there are any changes in the data given at the time of allotment of TAN, you must communicate it to the IT department. You can do it by filling out the “Form for changes or correction in TAN data for TAN allotted” and paying the necessary fees.

Q8. Can I file an e-TDS return without TAN?

It is mandatory to quote TAN in TDS and TCS returns, whether filed online or offline. You must obtain TAN to prevent any problems down the line.

Q9. What if I submit an incomplete form 49B for getting TAN?

An incomplete Form 49B is not accepted by the department. The TIN Facilitation Centre assists the applicant in filling up the form correctly.

Q10. How is a new TAN intimated to the deductor?

The applicant is informed about a new TAN by NSDL at the address mentioned in Form 49B. Applicants can also check the status of their TAN allotment online.

Now that you know all about the Tax Deduction and Collection Account Number, you can decide whether you need it in the first place. If you require TAN, you can follow the steps and ensure that you get it on time so that you are ahead of the tax return filing process.