Full-Form of TAN
Full Form of TAN is Tax Deduction and Collection Account Number. TAN number is a ten-digit alphanumeric number that is allotted to any person under the income tax act, 1961, who are required to deduct TDS, i.e., tax deducted at source while processing any payment as specified under the act like payment for rent, commission, professional and technical payment, etc.
Who is Allowed to Apply for TAN?
Every person who is required to deduct and collect income tax on behalf of income tax authorities are compulsorily required to apply for TAN. Also, TAN is compulsorily required to be quoted in every TDS/TCS return, TDS/TCS payment challans, certificates to be issued, etc. Failure to apply for TAN may result in the application of the penalty. A person can be of any type like: –
- Individual
- Company
- Sole Proprietor
- Firms
- Association of Persons etc.
How to Apply for TAN?
- Every person required to deduct and collect tax on behalf of the government is required to apply for a tan, but now the question arises as to how to apply. A person may apply for TAN either through online mode or offline mode. It is easy, and one can simply follow the following steps to get his/ her TAN number.
- TAN number is allotted by Income tax authorities. In the case of the online application, an applicant needs to fill 49B online and submit the same along with application nominal fees. In the case of offline application, an applicant for allotment of TAN just needs to file form 49B and submit it at any of the TIN Facilitation Centres.
- The application form can also be submitted online. Once after filing of an application and submitting it the same at facilitation centers, an applicant will be allotted TAN subject to the condition that no discrepancies are found in the application. An acknowledgment number will be generated after applying. This number can be tracked online at the Income Tax Website.
Structure
TAX Deduction and Collection Account Number is a unique number allotted to each assessee. The structure is as follows: –
ABCD12345G
As visible above, the series contains 10 alphanumeric characters
- The first four are alphabets
- The next five are numbers
- The last character will again be an alphabet.
Example
As already mentioned in the structure, it is a 10 digit unique number.
DCBA98765G
Benefits
- TAN number, within itself, does not hold any benefits for the assessee except escaping from the file by complying with a legal requirement.
- It is also known as TDCAN, which serves the purpose of sorting, identifying, and matching the number of TDS? TCS deducted, collected, and providing necessary credit to the person against whose income tax liability TDS/ TCS is deducted.
- Overall, we can say that TAN provides benefits to income tax authorities for collecting tax at the point of time when income gets accrued.
Uses
The primary purpose is mentioned under the benefits. It serves the purpose of an early collection of tax as and when income gets accrued or earned by a taxpayer. However, as a part of legal compliance, a taxpayer can claim the following mentioned: –
- At the time of making any payments as specified under the income tax act where service receiver has to deduct TDS like salary, commission, rent, winning from lotteries, etc. person deducts TDS on behalf of the government and deposits the same into the government account. To match amounts while undergoing assessments, the amount needs to be reported under TAN.
- While making any payment challan in respect of TDS deducted or TCS collected, one needs to quote the TAN number in the payment challan otherwise same may be treated as invalid.
- While filing returns, one needs to compulsorily quote the TAN number.
- Also, while issuing TDS, the TCS certificates assessee needs to quote the TAN number; otherwise, the same may be treated as non-compliant and hence invalid.
- It records the address of the person who has deducted TDS on behalf of the IT department. Also, it captures the PIN, which is recorded with the department.
Difference Between TAN and PAN
- To understand the difference between TAN & PAN, we need to understand both terms. TAN is a unique 10 digit alphanumeric number allotted by the income-tax authority to a person who is required to deduct TDS or collect TCS, whereas PAN is a ten-digit alpha-numeric 10 digit number allotted by the income-tax authority for uniquely identifying each assessee.
- PAN can have designated as a unique identification number been allotted to each assessee who is required to or voluntarily opts for PAN. In brief, it can be said that TAN is a further responsibility on the shoulders of an assessee. Every assessee who is having TAN will compulsorily hold PAN, but the same is not in the case of PAN. Every assessee having PAN may not necessarily hold TAN.
Conclusion
TAN is the ten-digit alphanumeric number allotted by Income Tax authority to collect, deduct, and further depositing tax on behalf of another person to Income Tax Authorities. In the case of applicability, a person needs to compulsorily apply for TAN and further comply with all the legal requirements as specified under the Income Tax Act.
If a person does not comply with the provisions, then the authority may apply a file for it. While making any filings related to TDS/ TCS, the person holding TAN necessarily needs to quote TAN in all its correspondence; otherwise same may be treated as invalid. PAN is not the same as TAN. A person holding TAN will compulsorily hold PAN, but vice versa is not always required by law and regulation.
Recommended Articles
This has been a guide to the Full Form of TAN and its definition. Here we discuss the structure, example, and how to apply & who can apply for TAN along with benefits. You may refer to the following articles to learn more about finance –
