Tax Deduction Account Number (TAN) or Tax Collection Account Number is a 10-digit alphanumeric number issued by the Income-tax Department (we will refer to it as TAN). TAN is to be obtained by all persons who are responsible for deducting tax at source (TDS) or who are required to collect tax at source (TCS). Every person who requires to deduct tax while making payment to any other person has to obtain TAN. Under Section 203A of the Income Tax Act, 1961, it is mandatory to quote Tax Deduction Account Number (TAN) allotted by the Income Tax Department (ITD) in all TDS returns and Challans while depositing the tax in designated Bank.
Persons liable to apply for TAN
As discussed above, every person liable to deduct tax at source or collect tax at source is required to obtain TAN. However, a person required to deduct tax under section 194-IA can use PAN in place of TAN as such person is not required to obtain TAN.
Further, a person required to deduct tax under section 194-IB shall not be required to obtain tax deduction account number (TAN).
As per section 194-IB (as inserted by Finance Act, 2017), any individual or HUF [whose books of account are not required to be audited under section 44AB] is liable to deduct tax at the rate of 5% while making payment of rent of any land or building or both to a resident person if amount of rent exceedsRs. 50,000 for a month or part of a month.
Relevance of TAN
- As per section 203A of the Income-tax Act, 1961, every person who deducts or collects tax at source has to apply for the allotment of TAN. Section 203A also makes it mandatory to quote TAN in following documents:
- TDS statements i.e. return
- TCS statements i.e. return
- Statement of financial transactions or reportable accounts
- Challans for payment of TDS/TCS
- TDS/TCS certificates
- Other documents as may be prescribed
The provisions relating to obtaining of TAN will not apply to a person deducting tax under section 194-IA (i.e. from sale consideration of land/building) and to such person, as may be notified by the Central Government in this behalf.
Consequences of not quoting TAN
Section 272BB(1) provides for penalty for failure to obtain TAN and section 272BB(1A) provides for penalty for quoting incorrect TAN. Penalty imposable under section 272BB is Rs. 10,000.
Types of TAN Applications
There are two types of applications:
1) Application for allotment of TAN (Form 49 B) In case you do not have a TAN, you can submit Form 49B which is the application form for issuance of TAN at the TIN Facilitation Centers established by NSDL or can apply online.
2) ‘Request for New TAN Card or/and Changes or Correction in TAN data’ In case you want Change or Correction in data associated with your reformatted 10 digit TAN, you can use the “form for Change or Correction in TAN data” prescribed by ITD.
You can submit a duly filled-in application to any of the TIN-FCs managed by NSDL or can apply online.
How to apply TAN / Procedure to apply TAN
There are two modes for applying for TAN: (1) Online mode and (ii) Offline mode. They are as follows: OFFLINE- An application for allotment of TAN is to be filed in Form 49B in duplicate and submitted to any TIN-FC. Addresses of TIN-FCs are available at NSDL-TIN website (https://www.tin-nsdl.com).
In case of an applicant, being a company which has not been registered under the Companies Act, 2013, the application for allotment of Tax Deduction Account Number may be made in Form No. INC-32 (SPICe) specified under sub-section (1) of section 7 of the said Act for incorporation of the company
ONLINE – Online application for TAN can be made from the website of NSDL-TIN website. FEES for TAN ApplicationThe processing fee for the both the applications (49B and change request) is ₹55.00 (plus applicable taxes).
How soon a TAN intimation letter is dispatched ?
Normally 15 days are required to process the application, provided the application is found to be in order.