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Tax Deduction and Collection Account Number (TAN)

About of Service

  • Purpose: TAN is primarily used for the deduction and collection of taxes at source. Entities responsible for deducting or collecting tax at source need to obtain a TAN from the Income Tax Department.

  • Mandatory Requirement: Any person or entity liable to deduct tax at source (TDS) or collect tax at source (TCS) is required to obtain a TAN. This includes individuals, companies, firms, government offices, and other entities making payments subject to TDS/TCS provisions.

  • Identification: TAN serves as a unique identification number for entities responsible for deducting or collecting tax at source. It helps in tracking tax transactions and ensuring compliance with tax laws.

  • TDS/TCS Returns: Entities holding a TAN must file TDS/TCS returns periodically, providing details of tax deducted/collected and deposited with the government. TAN is used for filing these returns and facilitating communication with the tax authorities.

  • TDS/TCS Payments: TAN is used for making payments of tax deducted/collected at source to the government. It ensures proper identification of the taxpayer and facilitates accurate record-keeping of tax transactions.

  • Penalties for Non-Compliance: Failure to obtain a TAN or non-compliance with TDS/TCS provisions can attract penalties under the Income Tax Act, 1961. Penalties may also be imposed for late filing of TDS/TCS returns or non-payment of taxes deducted/collected at source.

  • Validity: Once issued, a TAN is valid for the lifetime of the entity unless surrendered or cancelled. However, entities are required to comply with ongoing TDS/TCS obligations as per tax laws.

  • Overall, the Tax Deduction and Collection Account Number (TAN) plays a crucial role in the Indian tax system, facilitating the deduction and collection of taxes at source and ensuring compliance with tax laws by entities responsible for such deductions and collections.

Uses and Benefits

  • Tax Deduction: When certain payments like salaries, rent, consultancy fees, etc., are made, tax needs to be deducted at the source before making the payment. Entities responsible for deducting this tax need to have a TAN.
  • Tax Collection at Source (TCS): Certain businesses or individuals are required to collect tax at source on specific transactions. TAN is necessary for them to comply with these provisions and remit the collected tax to the government.
  • Filing Returns: Entities holding a TAN must file TDS/TCS returns regularly, providing details of tax deducted/collected and deposited with the authorities. These returns help the tax department track tax transactions and ensure transparency in tax compliance.
  • Payment of Taxes: TAN is used while making payments of TDS/TCS to the government. It serves as an identification number for such transactions, facilitating accurate record-keeping and reconciliation.
  • Compliance Monitoring: The government utilizes TAN to monitor tax compliance by entities. Regular scrutiny of TDS/TCS returns helps identify discrepancies or non-compliance, enabling enforcement actions if necessary.

Additional Disclosure

  1. Nature of Deduction/Collections:

    • Specify the nature of payments for which TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) is applicable, such as salaries, contractor payments, interest, dividends, etc.
  2. Details of Deductees/Collectees:

    • Provide details of deductees/collectees, such as their names, addresses, PAN (Permanent Account Number), and amounts paid or credited.
  3. Statement of Deductions/Collections:

    • Submit periodic statements (e.g., quarterly TDS/TCS returns) to the Income Tax Department as per prescribed formats and timelines.
  4. Compliance with TDS/TCS Provisions:

    • Ensure compliance with applicable TDS/TCS provisions under the Income Tax Act, including rates of deduction/collection, exemptions, and thresholds.
  5. Verification and Certification:

    • Certification by authorized signatories (e.g., directors, partners) verifying the correctness and completeness of information provided in TDS/TCS returns and other documents.
  6. Record Maintenance:

    • Maintain proper records and documentation related to TDS/TCS deductions/collections, including agreements, invoices, receipts, and correspondence with deductees/collectees.
  7. Tax Deposits:

    • Deposit TDS/TCS amounts deducted/collected into authorized bank accounts within the prescribed timelines and furnish proof of deposit.
  8. Audits and Assessments:

    • Cooperate with tax authorities during audits or assessments related to TDS/TCS compliance, providing necessary documents and explanations.

Documents & Detail Required

  • TAN Certificate: This is the official document issued by the Income Tax Department of India upon successful application for a TAN. It contains the following information:

    • TAN Number: A 10-digit alphanumeric code assigned to the entity.
    • Name and Address: Name and address of the entity to whom the TAN is issued.
    • Validity: The period for which the TAN is valid. TANs are usually issued without an expiry date but can be canceled or surrendered if the entity ceases to exist or if there are changes in its structure or operations.
    • Issuing Authority: Details of the Income Tax Department office that issued the TAN.
  • TAN Application Form: This form is used to apply for a TAN and typically includes details such as:

    • Name and address of the applicant.
    • Nature of business or activity for which the TAN is required.
    • Details of authorized signatories.
    • Declaration by the applicant.
  • Acknowledgment Receipt: A proof of submission provided by the Income Tax Department upon receiving the TAN application. It contains a unique acknowledgment number, date of submission, and other relevant details.

  • TAN Allotment Letter: This letter confirms the allotment of the TAN and provides instructions on its usage, such as quoting the TAN in TDS/TCS returns, challans, and other relevant documents.

  • These documents are crucial for maintaining compliance with tax regulations and facilitating communication with tax authorities regarding tax deductions and collections. It's essential to keep them safe and readily accessible for reference when required.

FAQ'S

What is TAN?

TAN stands for Tax Deduction and Collection Account Number. It is a unique 10-digit alphanumeric code issued by the Income Tax Department of India to entities responsible for deducting or collecting tax at the source.

Who needs to apply for TAN?

Any entity, including individuals, companies, firms, trusts, or organizations, that are required to deduct or collect tax at source as per the Income Tax Act, 1961, needs to apply for a TAN.

How to apply for TAN?

You can apply for TAN online through the NSDL-TIN website or at authorized TIN facilitation centers (TIN-FCs) across India. The application process typically requires filling out Form 49B and submitting it along with the necessary documents and fees.

What are the documents required for TAN application?

Documents such as proof of identity, proof of address, and PAN (Permanent Account Number) are generally required for TAN application. The specific requirements may vary based on the type of entity applying for TAN.

. Is there a fee for obtaining TAN?

Yes, there is a prescribed fee for obtaining TAN. The fee may vary depending on whether the application is made online or offline and the mode of payment chosen.