What are the process and benefits of the Tax Account Deduction Number (TAN)?

Introduction

The Tax Deduction and Collection Account Number, commonly known as TAN, is an essential alphanumeric identifier issued by the Income Tax Department of India. TAN registration is mandatory for all entities to comply with Indian income tax laws. The application process involves filing applications, acknowledgment, payment, and submission. In this blog, we will understand the structure of TAN numbers, the process of registering a TAN, and its benefits.

What is a TAN application?  

A 10-digit alphanumeric number called the TAN, or Tax Deduction and Collection Account Number, is necessary to withhold and deposit tax at the source. It is a special identifying number given to people, organizations, and businesses by the Income Tax Department of India if they must withhold or collect tax at the source.

To apply for a TAN Number, you must submit Form 49B, which is correctly filled out and signed, as well as the required paperwork and the application fee. Through the NSDL or UTIITSL portals, TAN applications can be submitted online. The Income Tax Department issues the TAN to the applicant after processing and verifying the application. To comply with Indian income tax laws, all entities—including people, partnerships, businesses, and trusts—must obtain TANs.

What is the Structure of the TAN Number?

The correct structure of a TAN is as follows: ABBBB89899C

1. City or State Code: The first three characters in the TAN represent the city or state where the TAN was issued. These characters help identify the location of the TAN holder.
2. Initial Letter: The fourth character in the TAN corresponds to the tax deductor’s initial letter. It signifies that the name of the Tax Deductor begins with this particular letter.
3. Numeric Numbers: The next five characters in the TAN are system-generated numeric numbers. These numbers are assigned by the system and do not hold any specific significance or meaning.
4. Check Digit: The last character in the TAN is an alphabetic number, known as the check digit. It is generated by the system and serves as a verification digit to ensure the accuracy and integrity of the TAN.

What is the Process to Register for a TAN Application?

A. Application Process

The application procedure involves:

• The applicant is required to fill out Form 49B online and then submit the form.
• In case any errors are found, they should be rectified before re-submitting the form.
• After submission, a confirmation screen will appear displaying all the information provided by the applicant.
• Now, the applicant can choose to either edit the information or confirm it as it is.

B. Acknowledgement

Upon successful confirmation, a screen displaying an acknowledgment will be presented. The acknowledgment includes the following information:

• A unique 14-digit acknowledgment number
• Applicant’s status
• Applicant’s name
• Contact details such as address, email, and telephone number
• Payment details
• A designated area for the applicant’s signature

The applicant is required to save and print this acknowledgment for future reference. When providing a signature or a left thumb impression, it must be confined within the provided box in the acknowledgment. For applicants who are not individuals, the authorized signatory should sign the declaration. If a left-hand thumb impression is used, it should be endorsed by a Magistrate, Notary Public, or Gazetted Officer, accompanied by their official seal and stamp.

C. Payment

The fee for processing a TAN application is 65.00, which includes a 55.00 application charge plus an 18.00% Goods & Services Tax. Payment can be made through demand draft, cheque, credit card/debit card, or net banking.

D. Submission

Please follow these steps to submit your documents:

1. Sign the acknowledgment form and send it, along with the demand draft if applicable, to the following address:

Protean e-Governance Infrastructure Limited 5th floor,

Mantri Sterling Plot No. 341, Survey No. 997/8

Model Colony Near Deep Bungalow Chowk
Pune – 411016.

2. Write “APPLICATION FOR TAN – Acknowledgment Number” (e.g., “APPLICATION TAN – 88301020000244”) on the envelope. Make sure your signed acknowledgment form and demand draft, if applicable, reach the TIN-Facilitation Centre of Protean within 15 days from the date of your online application.Your application will only be processed once Protean receives the duly signed acknowledgment form and verifies the payment.

What are the benefits of TAN Registration?

The following are the benefits of TAN registration:

• Deductors can easily receive notification from the Income Tax Department regarding TCS and TDS from the database of updated TAN details.
• Every deductor has an authenticated login area, which provides secure access to their TCS and TDS information.
• Deductors have the provision to download the latest Input File for the purpose of preparing a correction statement and checking the challan status online.
• The deductor can receive a statement showing the status of TDS, which helps in monitoring and managing the TDS obligations.
• Reconciliation of tax deducted at source (TDS) to a TAN holder in accordance with Section 200A is simple, ensuring proper reporting and compliance.
• Deductors can easily upload e-TDS returns online, simplifying the process of TDS compliance and reporting.
• The registration and verification of a TAN is quite simple and easy. Deductors can know their TAN details just by providing a name or TAN number.

By obtaining a TAN, entities can enjoy these benefits, ensuring smooth tax operations while adhering to the legal requirements of tax deduction and collection.

Summary

Obtaining a Tax Deduction and Collection Account Number (TAN) is a fundamental requirement for entities responsible for deducting or collecting taxes at the source in India. The TAN serves as a unique identifier and facilitates streamlined tax processes, ensuring compliance with tax laws and minimizing the risk of legal repercussions. By registering a TAN, entities can efficiently manage tax-related activities, track and reconcile tax payments, and maintain proper records.