September 21, 2023

Tax Deduction and Collection Account Number (TAN)

TAN is a 10 digit alphanumeric number which stands for Tax Deduction and Collection Account Number. This number lets the responsible person for withdrawing tax at source or collecting tax at source. This number is allotted by the Income Tax Department.  All most all non-profit organizations and profit organizations require to pay tax. If failed, it may lead to a fine up to Rupees 10,000 according to Section 272 BB of the Income Tax Act. Salaried individuals do not have to pay tax.

Components of TAN

In a TAN number, the 1st four characters are the alphabet and the next 5 characters are number followed by the last character, which is an alphabet. 

For example: Suppose my name is Yash, and I start a business, then my TAN number will be XCGT Y 2123 L.

Features of TAN Number

  • TAN number is valid for a lifetime.
  • Individuals who are running a proprietorship are needed to obtain a TAN number.
  • It combines the TDS/TCS file for doing corrections in return.
  • TAN number can be collected in 2 ways either within one month before TDS is deducted or from the end of the month from which TDS is deducted
  • TAN number is required when TDS is being deposited in an authorized bank. The Challan 281 also needs to be used.
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Advantages of TAN number

  • It is used for reducing interest, salary, interests, dividends, etc.
  • TAN number is also used to determine Postal Index Number which is registered with the Income Tax Department.
  • TAN number is also used for certificates, challans, and returns.
  • The complete address of the person who withdraws the tax on behalf of the Income Tax Department is auto determined.
  • A collector can apply for TAN for each branch in case he has many departments.
  • Acquisition of eTDS statements filed earlier.
  • All services such as eTDS online filling, Challan Status Enquiry, etc. are in one window.
  • The deductor can know the status of all statements filed. 

Eligibility for TAN registration

According to the Income Tax Act, a person who is any of the following is eligible for TAN.

  • Individual (Sole Proprietorship)/Branch of individual business
  • Firm / Branch of firm
  • Company/Branch/Division of a company
  • Association of Persons/Body of Individuals/Artificial Juridical Person/Association of Persons (Trusts)
  • Hindu Undivided Family (HUF)

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