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    What is TAN? How to Apply for TAN

    Jun 10, 2024
    5 min | Views 365

    TAN, or Tax Deduction and Collection Account Number, is a unique code given to individuals or entities for deducting or collecting taxes. It's crucial for the TCS and TDS process and must be included in all tax filing work.

    What is TAN?

    A Tax Deduction and Collection Account Number (TAN) is a 10-digit alphanumeric code issued by the Indian Government's Income Tax Department. It's unique to each individual or entity and plays a crucial role in the country's tax collection system.

    Structure And Mechanism

    The TAN code is a unique identifier comprising letters and numbers in a specific arrangement. However, this arrangement isn't inconsistent but signifies the below important information:

    • The first three Alphabets of the sequence represent the holder's jurisdiction clause.

    • The 4th character marks the beginning of the bearer's name. It's important to note that this number can be assigned to individuals or enterprises. In such instances, the enterprise's initial serves as the 4th letter.

    • The next 5 numerals are added in for dissimilarity.

    • The last alphabet serves as a selectable marker, enhancing the uniqueness of each number.

    Relevance of the TAN Number in the Economic World

    It's important to take the TAN (Tax Deduction and Collection Account Number) for each business engaged in tax filings and returns. This requirement is fulfilled under section 203A of the IT Act, 1961. Without this number, filing taxes becomes very difficult, leading to potential complications throughout the process.

    Additionally, failure to provide the TAN results in the automatic rejection of submitted papers. Furthermore, without the TAN, entities cannot issue or receive TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) certificates.

    Furthermore, the absence of the TAN leads to challenges in creating IT files and ongoing issues with documentation. Additionally, without this number, it's impossible to complete various IT-related forms and slips, disrupting the enterprise's or business's smooth operation.

    What are the Consequences of Not Being Able to Quote the TAN Number?

    Under Section 272BB(1) of the ITA, 1961, failure to provide a TAN number results in penalties for individuals and enterprises.

    According to Section 272BB(2) of the ITA, 1961, providing an incorrect TAN incurs penalties, with a maximum fine of ₹10,000.

    However, understanding TAN requires a thorough knowledge of the two available forms. The first is for getting a new TAN for individuals and companies without an existing ID, and the second is for making corrections to an already-given TAN number.

    The processing fee for obtaining or amending a TAN is ₹65, which includes all taxes and GST.

    Types of TAN Applications

    There are two major types of TAN applications, and they are:

    • Application for issuance for a new TAN

    • The form for change or correction in TAN for allotted TAN

    TAN Application Process

    Entities can apply for TAN through both offline and online modes. The process for both is as follows.

    Offline Application of Allotment of TAN -

    Entities need to follow the steps given below to apply for TAN offline:
    a. Download Form 49B: The entity needs to download Form 49B from the Income Tax Department's website.
    b. Fill out the form: The applicant must complete the form with all the required details. The input must be in block letters using black ink.
    c. Submit the form: The entity must submit the filled form and the required documents at any TIN Facilitation Center.
    d. Fee Payment: The entity must pay the processing fee while submitting the form.
    e. Acknowledgement: The entity will receive an acknowledgement after submitting the form. The entity can track the status of the TAN application with the same.

    Online Application of Allotment of TAN

    a. Form 49B: To apply for the TAN online, you can visit the NSDL website and complete Form 49B online. Enter your name, address, and other details related to a tax deduction or collection.
    b. Acknowledgement: You will receive an acknowledgement number on the form submission. Print the acknowledgement number and share it with the NSDL offices.
    c. Fee Payment: You may pay the requisite fees online through a cheque or demand draft.
    d. TAN Details: The Income Tax Department will verify details and issue a TAN number to the applicant via email or post to the registered address.

    Acknowledgement Form And TAN Application

    The details that might be included in this page of acknowledgement provided are:

    The provided form includes details of an individual, like contact information and payment processing details. Additionally, it displays the name and present status of both the bearer and the applicant. A blank space is designated for the bearer's signature.

    After understanding what TAN is and acquiring the requisite form, printing out the document and signing it in the blank space provided is crucial. You must keep this form secure until the TAN number is allocated.

    Additionally, provisions for thumbprint verification are available, which necessitates verification and endorsement by authorised personnel such as Gazette officers or magistrates, among others.

    In conjunction with these instructions, a payment of ₹55 plus GST, totalling ₹65, must be made. However, this sum can be deposited through various means, including cheques, demand drafts, or electronic methods such as net banking and UPI transfers.

    For offline submissions, the 49B form must be downloaded and completed in the same way. Submission and retrieval of this form must be conducted through the designated NSDL platform authorised for such transactions.

    Pointers for Filling Form 49B

    A list of the main aspects of TAN application in Form 49B is as follows:

    • Form 49B should only be filled in English and capital letters.

    • The assessing officers shall submit the relevant information to collectors. This information is to be taken from the income tax office.

    • Information such as district name, area code, and details of tax deductors and collectors should be provided to them. Without current information, the income tax office would not be able to help you find out more about this.

    • Please take a pen and a paper and fill out the registration form fully without blanks or incomplete sections.

    • Persons in charge of furnishing and submitting tax have to show that they are self-employed workers.

    • The applicant’s address field should only include an Indian address.

    The Bottom Line

    The Tax Deduction and Collection Account Number (TAN) is a unique identification factor for businesses. Obtaining a TAN is simple, and using online methods can significantly enhance efficiency. Toll-free customer care numbers are available for easy access. Furthermore, it's crucial to emphasise that TAN holds significant importance for enterprises and individuals involved in taxation-related fields.

    Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

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