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TAN :Tax Deduction and Collection Account Number

Created on 29 Aug 2018

Wraps up in 4 Min

Read by 1.8k people

Updated on 06 Sep 2022

Our everyday life from birth till death is connected to this one thing. Let the guessing start. 

Did you find what it is? 

It's Tax. We are interconnected with tax all through our life. And there is possibly no way one can escape from it or get rid of it. Right from a small candy to life-saving essential tax is everywhere. Having said that, as tax-paying citizens, we know that some terms are daunting and hard to decipher. We have got one such word for you today. 

TAN or Tax Deduction and Collection Account Number is a 10 digit number that is provided to any individual with the task of deducting tax at source (TDS) or collecting tax at source (TCS). As per the IT Act of 1961 section 203A, an individual should quote the same while he is filling his returns. 

Hence, it's crucial to know what it is and how one can get one. If you have no idea regarding the same or are falling short of certain information, then this article is for you. 

What is TAN? 

TAN is a number independent of your PAN number offered to individuals or firms who deduct tax at the source. It will enable the income tax to capture all the crucial details of the individual who is acting on behalf of the IT department by deducting tax at the source.

They will have to provide the number in order to avoid payment of a penalty of up to Rs 10,000. The following people are eligible to get a TAN number as per the income tax act. 

  • Individuals 
  • People who are paying salary or commission to another individual.
  • Sole proprietorship or branch of the individual business.
  • Firm or its related branches.
  • A company, branch or division of the same.
  • Hindu Undivided Family (HUF)
  • Association of persons, a body of individuals, trusts and Artificial Juridical Person.

Features and Structure of TAN 

Unlike certain unique identification numbers, which makes no sense, the TAN number as a structure. In other words, the 10 digit number has a definite format that it follows and is not a random mix of numbers. This is particularly true with the case of the 1st four characters. Still perplexed? Take a look at the below example. 

Say a person named RAM who hails from Hyderabad wants to get a TAN number. Then his TAN number would look something like below,

HYDR12896M

Wherein the first 3 alphabets indicate the city he is from, and the 4th alphabet is the starting letter of his name. On the other hand, if he represents a company, say ABC ltd, then the 4th letter will have the company's name instead of his. 

Apart from all this, the TAN also has certain features. They are, 

  • Once you get a TAN number, it is valid for a lifetime, relieving you from the stress of going through the entire process again. 
     
  • It consolidates the TDS and TCS files for correcting the returns. 
     
  • TAN have to be obtained either within a month's time after TDS deduction or well before the TDS is deducted. 
     
  • While depositing the TDS into a bank account, an individual or firm should tell the TAN number and should be using the Challan 281. 

Why is TAN Significant? 

A TAN is crucial when filing returns. It is one of the many keys one should have to have a smooth tax filing process. In the absence of TAN, everything from depositing money into the account to filing returns will turn into a bizarre experience.

Furthermore, getting a TAN is also beneficial. Some of the advantages are listed below, 

  • It is useful while deducting interest, salary, dividends and/or any interests
     
  • It comes in handy for capturing the postal index number, which is recorded with the income tax department. 
     
  • TAN id used in certificates, returns and challans. 
     
  • Retrieval of eTDS statements is simplified and less hectic.
     
  • The status enquiry also becomes easy. 

Applying for new or correction of TAN  

Now it's time we address the most crucial question. How can one apply for TAN? 

In the digital era, everything is just fingers away. You can apply for the same online via the NSDL-TIN website. You will have to give the necessary details as asked in the 49B form and pay a fee of Rs 55 + tax. After which, you can print the acknowledgement slip. Within a period of 5 to 15 days, you will be allotted with your TAN number. 

Those who feel the same is not possible can also apply for the same offline. For this, the applicant has to fill the 49B form and submit the same to TIN-FC (all the addresses and contact details can be obtained from the TIN-NSDL webpage). 

Now you might be wondering how one could get the wrong information corrected. You can simply go to the official website and request cancellation of the TAN or simply request a form for correction of the details. For doing so you will need the following documents:

  • A proof of your TAN number which you are holding currently.
     
  • Relevant documents to back your correction. For instance, if the mistake is in your address, then an address proof will have to be submitted. 

The Bottom Line 

A TAN is crucial in order to make life easier. Further, there are chances that the IT department might cancel your TAN if there is incomplete information or no proper payment is made. In such a case, you will be forced to re-apply. So exercise caution while filling the same. 

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Deb P Samaddar

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Deb is a keen learner and eager to learn about the finance world. He is that person who would never stop talking, but my oh my, the words he uses, are not something a normal human would in a regular conversation. While the conversations are well, interesting, the write-ups are faultless. With an increased proclivity towards tech and language, he aims to capitalise on his interests as a content writer at Finology.

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