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ARN. No. KLI/23-24/E-BB/1201
Features
Ref. No. KLI/22-23/E-BB/999
TAN (Tax Deduction and Collection Account Number) is a 10-digit alphanumeric code issued by the Income Tax Department of India, required by businesses and organizations to track and report taxes deducted or collected at the source (TDS/TCS).
Every wondered what is TAN, and why you should care about it?
If you run a business, manage an organization, or are responsible for handling salaries, you might have come across the need to deduct taxes from your payments. It could be anything from salaries to contractors’ fees or interest payments. When you deduct tax at the source—what we commonly call TDS (Tax Deducted at Source)—you need a unique identifier to report these deductions to the Income Tax Department. That’s where TAN comes into play.
TAN full form is Tax Deduction and Collection Account Number. While the full form clearly specifies what TAN stands for, understanding TAN number meaning is of utmost significance. It’s a unique 10-character alphanumeric identifier issued by the Income Tax Department of India. Now, before your eyes glaze over with all these technical terms, let’s put it in simpler words.
Imagine you’re an employer who has to pay salaries to your employees. As a responsible employer, you must deduct tax from your employees’ salaries before paying them and then deposit it with the government. This process is known as Tax Deducted at Source (TDS).
But how does the government know who has deducted how much tax and from whom? That’s where the TAN comes into play. The TAN helps the government keep track of these deductions, ensuring that everything is accounted for. Here are a few TAN no examples:
Example 1: TAN Number Meaning for a Business Owner
Imagine you’re a business owner named Rohan who has just started hiring employees. As part of your responsibilities, you need to deduct taxes from your employees’ salaries and pay them to the government. To do this legally, you need to obtain a TAN, or Tax Deduction and Collection Account Number. The Income Tax Department issues this 10-digit alphanumeric code, and is essential for tracking the taxes you’ve deducted. Without a TAN, you can’t deposit these taxes, which could lead to legal complications for your business.
Example 2: TAN Number Meaning for a Freelancer
Let’s say you’re a freelancer, Priya, and you’ve recently landed a big project with a corporate client. This client must deduct tax at source (TDS) before paying you. To do this, they need a TAN, or Tax Deduction and Collection Account Number, which allows them to deduct and deposit the tax on your behalf legally. The TAN ensures that the tax deducted from your payment is correctly attributed to you when the client submits it to the government.
Any person or entity liable to deduct or collect tax at source as per the Income Tax Act of 1961 must apply for TAN. It includes businesses, companies, local authorities, and government departments. Even non-profit organizations, trusts, and individuals required to deduct tax under certain circumstances must obtain a TAN. With this number, they can proceed with the TDS/TCS process, making it a crucial requirement for many taxpayers.
For several reasons, it is essential to understand what a TAN number is and what it means.
A TAN comprises ten characters:
For example, a TAN might look like ABCD12345E. The structure ensures a unique identification for each entity involved in tax deduction or collection, facilitating easy tracking and management by the Income Tax Department.
Applying for a TAN can be done both online and offline. Here’s a step-by-step guide for both methods to know what is TAN application process:
The application fee for TAN is nominal. As of the latest update, the cost is approximately ₹65 plus applicable taxes. This fee is the same for both online and offline applications. Payment can be made through various methods, such as credit/debit cards, net banking, or demand drafts.
To check the status of your TAN application:
To search for a TAN:
If you need to rectify any details or face issues related to TAN, follow these steps:
Understanding the importance of TAN and adhering to its processes and regulations is crucial for compliance with Indian tax laws. Whether you are a business, an organization, or an individual responsible for deducting tax at source, ensuring you have a valid TAN and using it correctly can help you avoid penalties and streamline your tax-related processes.
1
No, an individual or entity should not have more than one TAN. If multiple TANs are allotted, the additional TANs should be surrendered.
2
Yes, quoting TAN on all TDS returns, TDS payments, and any other correspondence related to the Income Tax Department is mandatory.
3
No, TAN is specifically used for TDS/TCS purposes and should not be used for any other tax-related transactions.
4
Typically, it takes about 7 to 15 working days to receive a TAN after the application is processed and verified.
5
If your TAN application is rejected, you should check the reason, rectify the errors, and reapply with the correct information.
6
TAN can be canceled if it is no longer required, such as in business closures. A cancellation request can be submitted through the NSDL website or TIN-FC.
7
To update details associated with your TAN, complete the correction form and submit it online or at a TIN-FC with the required supporting documents.
8
No, TAN does not have a validity period. Once issued, it is valid for a lifetime unless surrendered or canceled.
9
Failure to obtain a TAN or quoting an incorrect TAN can attract a penalty of ₹10,000 under Section 272BB of the Income Tax Act.
Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.
Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors
Pay 10,000/month for 10 years, Get 1,65,805/Year* for next 15 years.
ARN. No. KLI/23-24/E-BB/1201
Features
Ref. No. KLI/22-23/E-BB/999
The information herein is meant only for general reading purposes and the views being expressed only constitute opinions and therefore cannot be considered as guidelines, recommendations or as a professional guide for the readers. The content has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Recipients of this information are advised to rely on their own analysis, interpretations & investigations. Readers are also advised to seek independent professional advice in order to arrive at an informed investment decision. Further customer is the advised to go through the sales brochure before conducting any sale. Above illustrations are only for understanding, it is not directly or indirectly related to the performance of any product or plans of Kotak Life.
