TAN Registration

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What is TAN?

TAN i.e. Tax Deduction and Collection Account Number is a 10 digit alpha numeric number required to be obtained by all persons who are responsible for deducting tax at source or collecting tax at source. It is compulsory to quote TAN in TDS / TCS return (including any e-TDS/TCS return), any TDS / TCS payment challan, TDS/TCS certificates, Annual Information Return and other documents as may be prescribed.

Who must apply for TAN?

  • Every person liable to deduct tax at source or collect tax at source is required to obtain TAN. However, a person required to deduct tax under s​ection 194IA or section 194-IB or section 194M can use PAN in place of TAN as such person is not required to obtain TAN.

  • (1) Section 194IA provides for deduction of tax at source from payment on transfer of certain immovable property other than agricultural land.

  • (2) Section 194-IB provides for deduction of tax at source at the rate of 5% from payment of rent. The tax shall be deducted if the rent paid or payable exceeds Rs. 50,000 per month or part of the month. This provision is applicable on individual and HUF, who is not liable to tax audit under Section 44AB in the immediately preceding financial year.

  • Section 194M provide for deduction of tax at source at the rate of 5% on the sum paid or credited, to a resident, on account of contractual work, commission (not being insurance commission referred to in section 194D), brokerage or professional fees, by an individual or a HUF, if aggregate of such sum exceeds Rs. 50 lakhs in a financial year. This provision is applicable on individual and HUF, who are not covered under section 194C, section 194H and section 194J.

Why is it necessary to have TAN?

As per section 2​03A of the Income-tax Act, 1961, every person who deducts or collects tax at source has to apply for the allotment of TAN. Section 203A also makes it mandatory to quote TAN in TDS/TCS return (including any e-TDS/TCS return), any TDS/TCS payment challan, TDS/TCS certificates and other documents as may be prescribed. As per section 272BB, failure to apply for TAN or not quoting the TAN in the specified documents attracts a penalty of Rs. 10,000/-.

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