The Tax Deduction and Collection Account Number (TAN)
KAPG & Associates

The Tax Deduction and Collection Account Number (TAN) is a unique 10-digit alphanumeric identifier issued by the Income Tax Department of India to businesses and entities responsible for deducting or collecting tax at source (TDS/TCS). TAN registration is mandatory for businesses and organizations that deduct or collect tax, as it helps track tax payments and returns.

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Who Needs a TAN?

Employers: Businesses or employers who deduct TDS from employees' salaries.

Financial Institutions: Banks and financial institutions deducting tax on interest payments.
Contractors and Consultants: Entities deducting TDS on payments to contractors, consultants, or other service providers.
E-commerce and Service Providers: Organizations that need to deduct or collect tax under the TDS/TCS provisions.

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Importance of TAN

Mandatory for TDS/TCS Payments: TAN is required for all TDS/TCS payments made to the government.

TDS Return Filing: TAN is essential for filing TDS returns, which provide details of the tax deducted and paid.
Avoid Penalties: Failure to obtain TAN or quoting an incorrect TAN in TDS/TCS documents can result in a penalty of ₹10,000.

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TAN Usage and Compliance

Quoting TAN: TAN must be quoted in all TDS/TCS returns, TDS payment challans, TDS certificates issued to payees, and other tax-related documents.

TDS Certificates: After deducting tax, entities must issue TDS certificates to payees (e.g., employees, contractors) as proof of tax deduction.