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All About TAN Number – What it is and How to Apply?

TAN is a unique identification tool issued by the Income Tax Department of India to collect tax deduction and account number information. TAN number is a 10-digit alphanumeric code, containing details like the individual’s jurisdiction, initial of the person or company, and unique 6-digit system-generated ID.

Decoding TAN

BANB12345D – TAN

BAN – Jurisdiction, which is Bangalore in this case

B – Initial of the deductor

12345D- Unique system-generated ID

TAN is monitored under Section 203A of the Income Tax Act of 1961, and it is mandatory for individuals or businesses that can collect or deduct taxes on behalf of the Income Tax Department. TAN is an essential tool for anyone eligible for TDS or TCS, making it an important financial document for individuals and organisations alike. Let’s take a look at everything one needs to know about TAN.

Who is eligible for TAN?

Any individual or organisation paying salary or commission to another person must have their TAN. This includes trusts, firms, associations of 2 or more individuals, sole proprietorship, and business organisations. Individuals and Hindu Undivided Families are also eligible to hold TAN, along with Central or State Government or any local authority which might have people working for their department.

TAN is a mandatory document for anyone receiving a tax deduction or collection while paying salary, interest or dividends. Failure to mention the correct TAN details will attract fines of up to Rs. 10,000. It is also necessary if someone wants to save tax on income received from business or profession as it used to calculate TDS and input credit.

Structure of TAN

TAN number full form is Tax deduction and collection Account Number. It consists of 10 alpha-numeric characters sequenced to be unique for every single individual TAN holder. The first 3 letters of the digits point to the jurisdiction where that individual or company resides. The 4th digit is an alphabet, representing the initial of the TAN holder, or the company’s name. It is followed by 5 numbers and the alphabet, which is a computer-generated code that points to the particular tax account allocated by the Income Tax Department of India.

How to apply for TAN?

An eligible applicant can apply for TAN via an online or offline application process. Let’s take a look at how one can apply for the same.

  • Online application process –

Online application for TAN number has to be done in the official website NSDL TIN. Applicants can navigate to the online application tab, and open Form No. 49B to proceed with the online application. He or she will have to duly fill the entire form, with correct and up to date details. They will have to submit the same once the form is filled.

After clicking submit, a confirmation page will be shown to the applicant to allow him or her to check whether there is any discrepancy in the information or not. If there is an error, they can edit and proceed with the next stage, if there is no error, they can confirm submission and proceed to the acknowledgement page.

The applicant will be shown an acknowledgement page containing important details like the TAN status, 14-digit acknowledgement number, important details like the applicant’s name and contact details, payment information, etc. It is advised to note these details for future use.

An applicant should carefully go through the regulations and instructions before starting the online application process. The details provided by an individual will be used to calculate their input credit and future income tax audit. Moreover, it will also be used to calculate TDS whenever that individual applies for a credit from government-backed or non-banking financial institutions like Bajaj Finserv.

After successful submission of the Form 49B, the application page will redirect to the payment section. The applicant will have to pay a one time fee of Rs. 65, via cheque or demand draft (if paying as Central or State Government and autonomous body). The draft or cheque should be in favour of NSDL-TIN and should carry the applicant’s name and acknowledgement number on the reverse side.

  • Offline application process –

Applicants can also apply and obtain a TAN number by following the offline application process. In this case, they will have to collect Form No. 49B from any TIN-FC or download it from the official website. After filling the form, they can submit the document to their nearest Tax Information Network Facilitation Centre.

In both cases, the applicant will not have to submit any other documents while applying for TAN.

It is essential to benefits of TAN and to follow the above mentioned application process if an individual is eligible for TDS or TCS on behalf of an organisation, or self. It is also an essential identification tool that can streamline the income tax audit in India and help provide an accurate assessment.