TAN

TAN

 

1. What is TAN?

TAN (Tax Deduction and Collection Account Number) is a 10-digit alphanumeric number issued by the Income Tax Department (ITD) under Section 203A of the Income Tax Act, 1961.

It is mandatory for all persons responsible for deducting Tax Deducted at Source (TDS) or collecting Tax Collected at Source (TCS). TAN serves as a unique identification number to track all TDS/TCS transactions and ensure proper credit to the government.
 

2. Who Needs to Obtain TAN?

As per the provisions of the Income Tax Act, every person liable to deduct or collect tax at source must obtain TAN.

This includes:

1. Employers deducting TDS on salaries
2. Companies & Firms deducting TDS on payments
3. Individuals/HUFs liable to deduct TDS under specified provisions
4. Government departments
5. Persons collecting TCS

Mandatory Usage:

TAN must be quoted in:

1. TDS/TCS Returns
2. Payment Challans
3. TDS/TCS Certificates (Form 16/16A/27D)
4. All correspondence with the ITD

Exception:

Persons deducting TDS under Sections 194IA, 194IB, and 194M may quote PAN instead of TAN.

3. Different Types of TAN

TAN (Tax Deduction and Collection Account Number) is allotted to different categories of deductors based on their legal constitution. Though the format remains the same, it is issued to the following entities for TDS/TCS compliance:

• Individuals / Proprietors - For persons deducting TDS on payments such as professional fees, rent, or contractual charges.
• 2. Partnership Firms / LLPs - Required when firms deduct TDS on salaries, contractor payments, or other business expenses.
• 3. Companies - Mandatory for Private Limited, Public Limited, and OPCs deducting TDS on salaries and statutory payments.
• 4. Government Departments - Central and State Government offices deducting tax at source must obtain TAN.
• Trusts, Societies & NGOs - Applicable where such entities deduct TDS on salaries or professional services.
• Local Authorities / Statutory Bodies - Municipalities and statutory authorities require TAN for TDS/TCS deductions.

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