What is TAN in Income Tax, Purpose and Application Process?

The Income Tax Return (ITR) filing is about to start and at this time taxpayers, particularly new taxpayers have numerous questions such as What is TAN, or Tax Deduction and Collection Account Number, and why is it required for an individual to have it while deducting tax deducted at source (TDS). Here is what TAN is, who uses it, and why it's vital.

What is TAN?

TAN, is a ten-digit alpha-numeric number that must be obtained by anybody in charge of deducting or collecting taxes. ITD has recently included a search function on its website to help deductors discover their new TAN. Deductors can use this feature to locate the new TAN by searching by name and old TAN. To minimise any trouble while providing e-TDS statements, deductors are urged to find a fresh TAN from this site before it is integrated in their e-TDS statement.

Who is required to acquire TAN?

All people responsible for deducting tax at source or obligated to collect tax at source must get a TAN. TDS/TCS returns, payment challans, TDS/TCS certificates, and other papers mandated in contacts with the ITD must all include the TAN. A person obliged to deduct TDS under Section 194IA, Section 194IB, or Section 194M, on the other hand, can use PAN instead of TAN.

What is the purpose of having TAN?

Section 203A of the Income Tax Act of 1961 requires all persons who deduct or collect tax at source to apply for TAN allocation. The provision also requires all TDS/TCS/Annual Information Reports, payment challans, and certifications to include the TAN. Without a TAN, the deductor cannot file TDS/TCS statements or deposit challans for TDS/TCS payments in banks. Failing to apply for TAN or to quote it in the required paperwork results in a '10,000/- fine.

How to apply for a new TAN?

• An applicant must complete Form 49B online. The Deductor may apply online via TIN (Tax Information Network) or submit a physical TAN application to any NSDL TIN-Facilitation Center (TIN-FC).
• If there are any problems, please correct them and re-submit the form.
• A confirmation screen with the applicant's info will be presented.
• The applicant may either alter or confirm the same.

How to track the status of my TAN application?

After three days of application, applicants can use the status track tool on TIN to follow the status of their TAN application using the 14-digit unique Acknowledgement Number.

Why to use deductor TAN data?

Verifying the TAN of anyone who deducts tax from source (also known as TDS) on your behalf is a recommended practise. For the fiscal year's TDS data, consult your Form 16/16A/26AS. You can use the Know TAN Details tool to see if the money was deducted by the proper person. You must also give the TAN while filing your income tax.