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Introduction
In order to provide secure access to taxpayers and tax collectors, unique identification numbers like PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) are issued to registered individuals and entities. Using this ID, they can access the online portal and perform a number of functions, like filing and paying taxes.
What is TAN?
A TAN is a 10-digit ID containing a mix of alphabets and numbers. It is issued by the Income Tax Department to those who collect and deduct tax. The regulations around TAN are governed by Income Tax Act under Section 203A. This section makes it mandatory for TAN holds to enter the TAN for all TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) related returns.The TAN consists of 4 letters followed by 5 numbers and a single letter at the end. The first three letters represent the jurisdiction from which the TAN was issued. The fourth alphabet represents the first initial of the name of the entity or individual holding the TAN. The rest of the characters are randomly generated by a system.
Who should apply for TAN?
Anyone who has to deduct TDS or collect TCS will have to apply for a TAN. This usually extends to companies and people running businesses where they have to pay other taxpayers. This will also apply to those that have to collect tax at source. Every taxpayer or deductor has to mention the TAN in every TDS or TCS transaction, the respective returns, challans and certificates.
How to apply for TAN?
A taxpayer can apply for TAN using two different methods, the offline method and the online method.
- The Offline Method of Applying for a TAN The taxpayer should fill out and submit Form 49B. This form is for allotment of the TAN. The form should be filled out and submitted to any TIN facilitation centre with the required fees. Once the application is approved, the TAN will be allotted. Alternatively, the taxpayer can also download the application online from the official NSDL website and submit the required details. This form can be submitted to any TIN facilitation centre with the required fees. For an application where the taxpayer is present while submitting, no other supporting documents are required to be submitted to the Income Tax department.
- The Online Method of Applying for a TAN The taxpayers can only use the NSDL website to apply for a TAN online. The taxpayers can follow the instructions and enter the details correctly to apply. The form has to be filled out correctly with all necessary information before submission. Once the form has been submitted, the applicants will get an acknowledgement number which needs to be printed. This print needs to be sent to the NSDL headquarters in Pune. The fees will have to be paid through a cheque or through a demand draft that can be sent to Pune as well. After the head office of the Income Tax Department receives the application, they will verify the details and issue the TAN to the taxpayer. The NSDL will then send the TAN details to the taxpayer's address that was filled out in the form. Alternatively, an email may arrive with the TAN details. This email will also be the one that was filled out in the form.
The processing fee for applying for TAN is Rs. 65, which is inclusive of GST.Also Read: Applying For TAN? What You Need to Know About Form 49B
Where is TAN used?
A TAN is required for a number of functions related to Income Tax regulations. A TAN is required to log in to the NSDL website as a tax deductor or collector to fill out the formalities. A TAN is required to be entered in the following documents:
- TDS statements or TDS returns
- TCS statements or TCS returns
- TDS challans to facilitate as payments or as proof of payments
- TCS challans to facilitate as payments or as proof of payments
- Submission of TDS certificates to the individuals or organisations from whom the tax was deducted.
- Submission of TCS certificates to the individuals or organisations from whom the tax was collected.
- For any other Income Tax form where details of the tax deductor or collector may be required.
What happens in case of a default?
Not applying for a TAN, not mentioning the right TAN, attracts a heavy penalty. Therefore, if someone is entitled to deduct or collect tax, they must ensure that they have applied for TAN and have mentioned the correct TAN in their respective returns and certificates. As per the regulations of Section 272BB of the Income Tax Act, a penalty of Rs. 10,000 on the organisation or individual that deducts or collects tax (TDS or TCS) without having a TAN or by mentioning an incorrect TAN.
How to search for a TAN with other details?
Taxpayers can view the TAN of the organisation or individual that deducted tax or collected tax on their behalf through a simple search on the e-filing portal. The taxpayers should select the option of “Know PAN details” on the home page of the portal. This is available under the ‘Quick Links’ tab. The taxpayer can then choose the category of the deductor and enter the official name of the deductor as well as the state in which the deductor has registered. Next, the mobile number of the deductor has to be entered. Select the ‘continue’ option and enter the OTP.Ready to make the most of your money? Start your tax planning journey now!
FAQS - FREQUENTLY ASKED QUESTIONS
Should a business quote the TIN and the GSTIN ?
GST (Goods and Services Tax) regulations were introduced to replace all the existing indirect taxes and bring them under one bracket. Therefore, only mentioning the GSTIN is enough. The TIN no longer needs to be used unless VAT is applicable to the goods dealt with by the business.
Is there any fee applicable on any of the TAN, PAN & TIN numbers ?
In order to apply and register to get the TAN, a nominal charge of Rs. 65 (inclusive of GST) needs to be paid. This is actually Rs. 55 plus 18% GST. This has to be paid at the time of applying for a TAN. It can be paid via online methods or even through DD or cheque as per the convenience of the applicant.
In order to apply for a PAN, the taxpayer needs to pay Rs. 101 (inclusive of GST). This is actually Rs. 86 plus 18% GST. This has to be paid at the time of submitting an application for PAN, and it can be paid online or offline as per the convenience of the taxpayer.
There is no fee to be payable while obtaining a GST registration. Businesses can register their business online through the portal without any processing fees.
What happens if someone has more than one identity card ?
Only one TAN, PAN or TIN can be obtained for every entity or individual that has been registered. A different branch in a different state can have a different TAN. Therefore, one organization with branches in different states can have different TANs for each branch, but each branch can only have one TAN.
Only a single PAN is allowed for every taxpayer, including businesses with multiple branches. One organization cannot have more than one PAN, even if the organization has branches in different states.
GSTIN is linked to the PAN. However, if an organization has different branches in different states, different GST numbers can be obtained for each state. All these different GSTINs will be linked to the same PAN. GSTINs will remain one if the branches are in the same state and no separate registration is needed.
How long does it take to receive the identity cards ?
It takes around 7 to 15 days from the time of submitting the application for the applicant to receive the TAN.
It typically takes 2 weeks for a taxpayer to receive the PAN card after applying for it.
GSTIN is received within 2 to 6 working days after a business has applied for it.
Can anyone have all 3, TAN, PIN and TIN ?
Yes, an organization carrying out commercial activities may have all three identification cards. The TAN is needed when the organization has to deduct or collect tax from the people supplying services to the organization. For example, the organization may need professionals for audits and HR-related services. They may also need contractors. TDS needs to be deducted by the organization for this, and therefore, TAN is needed.
Since the organization is a taxpaying entity, the PAN is mandatory. The organization also provides goods and services in the form of commercial transactions. If the business crosses the threshold mentioned in the GST regulations, then the business will have to apply for GST registration and obtain a GSTIN.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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