TAN Application: Importance for Business Entities

Introduction

Tax Deduction and Collection Account Number (TAN) is a unique 10-digit alphanumeric code assigned by the Income Tax Department to businesses and individuals who are required to deduct tax at source or collect tax at source. It is a mandatory requirement for all entities that deduct or collect tax at source. In this article, we will explore the importance of the TAN application, its benefits, and how to apply for it.

Why is TAN important?

TAN is important because it helps the government to keep track of all the transactions made by entities that are required to deduct or collect tax at source. It also helps in the easy identification of such entities for tax compliance. TAN is mandatory for businesses and individuals that are required to deduct or collect tax at source.

Benefits of TAN (Tax Deduction and Collection Account Number) 

TAN has several benefits, some of which are mentioned below:

1. Mandatory requirement: TAN is a mandatory requirement for businesses and individuals that are required to deduct or collect tax at source. Failure to obtain TAN can lead to penalty and legal consequences.

2. Easy compliance: TAN makes it easy for businesses and individuals to comply with the tax laws. It helps in the easy identification of such entities and simplifies the process of tax compliance.

3. Timely processing of TDS and TCS returns: TAN helps in the timely processing of TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) returns. It helps in the efficient and effective management of tax transactions.

4. Online application and tracking: TAN application can be done online, and the status of the application can also be tracked online. This saves time and effort for businesses and individuals.

How to apply for Tax Deduction and Collection Account Number (TAN)?

TAN can be applied for online through the NSDL website. The steps involved in the application process are mentioned below:

• Visit the NSDL website (https://www.tin-nsdl.com/).
• Click on the ‘TAN’ option under the ‘Services’ menu.
• Click on the ‘Apply Online’ option.
• Select the appropriate category of the applicant (Individual, Company, etc.) and fill in the necessary details.
• Submit the application form along with the necessary documents.
• Pay the application fee online.
• Once the application is processed, the TAN will be allotted and communicated to the applicant through email.

FAQs on TAN Application

1. Who needs a TAN?

TAN is required by businesses and individuals who are responsible for deducting or collecting tax at source. This includes:

• Employers who deduct tax at source from their employees’ salaries

• Banks and financial institutions who deduct tax at source from interest payments

• Businesses and professionals who make payments for services or goods to vendors, contractors, or sub-contractors

2. How is TAN different from PAN?

While TAN and PAN (Permanent Account Number) are both 10-digit alphanumeric codes, they serve different purposes. PAN is a unique identification number assigned to individuals and businesses for tax purposes, whereas TAN is specifically for entities that deduct or collect tax at source.

3. How to verify TAN?

You can verify the validity of a TAN using the online TAN verification tool available on the NSDL website. This tool allows you to check if the TAN is valid and if it matches the name and address of the entity.

4. What are the consequences of not obtaining TAN?

Failure to obtain TAN can result in penalties and legal consequences, including dis-allowance of expenses, disqualification from government tenders, and imprisonment in severe cases.

5. Can TAN be surrendered?

Yes, TAN can be surrendered if it is no longer required by the entity. The process for surrendering TAN is similar to that of applying for TAN and can be done online through the NSDL website.

6. What is the fee for TAN application?

The fee for TAN application is Rs. 65 (excluding GST) for individuals and Rs. 65 (excluding GST) for companies, firms, LLPs, and other entities. The fee can be paid online using net banking, credit/debit card, or demand draft.

Conclusion

TAN is a unique 10-digit alphanumeric code assigned by the Income Tax Department to businesses and individuals who are required to deduct or collect tax at source. It is a mandatory requirement for all entities that deduct or collect tax at source. TAN has several benefits, including easy compliance, timely processing of TDS and TCS returns, and online application and tracking. TAN can be applied for online through the NSDL website. Thus the businesses and individuals must be aware of the importance of TAN Application to comply with the tax laws and avoid penalties and legal consequences.