In India, tax compliance is an essential responsibility for individuals and organizations involved in financial transactions. One such important requirement under the Income Tax Act, 1961 is the Tax Deduction and Collection Account Number (TAN), commonly referred to as the TAN Card. Any person or entity responsible for deducting or collecting tax at source must obtain a TAN. This article explains the meaning of TAN Card, its uses, eligibility, and the complete application process.
What Is TAN Card and What Does TAN Stand For?
TAN stands for Tax Deduction and Collection Account Number. The Income Tax Department of India issues a 10 character alphanumeric number to entities that are required to deduct or collect tax at source.
Structure and Format of TAN Number
A typical TAN looks like this: ABCD12345E
- First 4 characters – Alphabetic (represent jurisdiction)
- Next 5 characters – Numeric
- Last character – Alphabetic (checksum)
The TAN Card itself is not a physical card like PAN anymore; instead, we issue TAN as an allotment letter, and people use the number for all tax related filings and communications.
Legal Basis of TAN
As per Section 203A of the Income Tax Act, 1961, every person who:
- Deducts Tax Deducted at Source (TDS), or
- Collects Tax Collected at Source (TCS)
must obtain a TAN and quote it in all related documents.
Failure to apply for TAN or quoting an incorrect TAN can attract a penalty of ₹10,000 under Section 272BB.
Who Needs to Apply for a TAN Card?
TAN is mandatory for:
- Employers deducting TDS on salary
- Companies deducting TDS on payments like rent, interest, commission, or professional fees
- Banks and financial institutions
- Partnership firms and LLPs
- Trusts and NGOs
- Government departments and local authorities
- Sellers collecting TCS on specified goods
Who Does NOT Need TAN Card?
- Individuals or entities deducting TDS under Section 194 IA (property purchase),
- Section 194 IB (rent by individuals), and
- Section 194M (payments to contractors/professionals)
These deductors can use their PAN instead of TAN.
Uses of TAN Card
The TAN is required for several statutory and compliance purposes. Some major uses include:
1. Filing TDS/TCS Returns
Every quarterly TDS or TCS return must mention the TAN of the deductor.
2. Issuing TDS Certificates
Forms such as:
- Form 16 (Salary TDS)
- Form 16A (Non-salary TDS)
must contain the TAN.
3. Payment of TDS/TCS
Challans used for depositing TDS/TCS (such as Challan 281) require quoting of TAN.
4. Tracking Tax Credits
TAN helps the Income Tax Department track TDS/TCS payments and credits accurately.
5. Compliance and Assessments
TDS/TCS matters use TAN in notices, assessments, and correspondence.
Importance of TAN Card
The TAN Card ensures:
- Proper identification of tax deductors and collectors
- Accurate credit of taxes to the government
- Smooth processing of TDS returns
- Transparency in tax administration
- Avoidance of penalties and legal complications
Without a TAN, someone considers TDS compliance invalid, even if someone has deducted and deposited the tax.
How to Apply for TAN Card (Step-by-Step Process)
The applicant can make the application for TAN online or offline.
Online Application Process for TAN
Form 49B is used to complete the online application.
Step by Step Process:
- Visit the authorized TIN facilitation website
- Select “Apply for TAN (Form 49B)”
- Fill in details such as:
- Name of applicant
- Address
- Type of deductor
- Jurisdiction details
- Submit the form
- Pay the application fee (approximately ₹65 including GST)
- An acknowledgment number is generated
- TAN is allotted within 5 to 10 working days
The authority can issue the TAN allotment letter for download.
Offline Application Process for TAN
- Obtain Form 49B from a TIN Facilitation Center
- Fill the form in capital letters
- Submit it at the TIN center along with the fee
- Receive acknowledgment
- TAN is issued and sent by post
Documents Required for TAN Application
Generally, no one needs to attach documents with Form 49B. However, correct details are mandatory, including:
- Name and address of the applicant
- PAN of the deductor (if applicable)
- Type of deductor (company, firm, government, etc.)
How to Check TAN Status
Applicants can check TAN status online using:
- Acknowledgment number, or
- Name and date of birth/incorporation
Once allotted, TAN can also be verified through the Income Tax Department database.
Difference Between PAN and TAN
Let’s explore the difference between PAN and TAN and when each is required:
| Basis | PAN | TAN |
|---|---|---|
| Purpose | Identification of taxpayers | Identification of tax deductors |
| Mandatory for | All taxpayers | Only TDS/TCS deductors |
| Issuing Authority | Income Tax Department | Income Tax Department |
| Format | 10 alphanumeric | 10 alphanumeric |
| Penalty for non-compliance | ₹10,000 | ₹10,000 |
Common Mistakes to Avoid While Applying
- Applying for multiple TANs (only one entity is allowed to have a TAN).
- Quoting incorrect TAN in TDS returns
- Using PAN instead of TAN where TAN is mandatory
- Delay in TAN application after becoming liable for TDS
Frequently Asked Questions (FAQs)
No, TAN is mandatory only for persons or entities required to deduct or collect tax at source. Ordinary taxpayers only need PAN.
No, a person or entity is allowed to have only one TAN. Having multiple TANs is illegal and can attract penalties.
Failure to apply for TAN or quoting an incorrect TAN can lead to a penalty of ₹10,000 under the Income Tax Act.
TAN is generally allotted within 5 to 10 working days after successful submission of the application.
No, for TDS under Section 194 IA, buyers can use their PAN instead of TAN.
