Regulatory & Tax

TAN (Tax Deduction Account Number)

10-character alphanumeric ID required for any business deducting Tax at Source (TDS) — separate from PAN.

TAN format: 4 letters (city code + entity initial) + 5 digits + 1 letter check digit. So `BLRR12345A` indicates Bangalore region.

Who needs TAN: any business deducting TDS — paying salary above ₹15K/month, contractor payments, professional fees, rent above ₹50K, commission. Apply via Form 49B; takes 5-10 days. Failure to apply but deducting TDS = penalty under Section 272BB.

TAN is used in TDS challan, quarterly TDS returns (24Q for salary, 26Q for non-salary, 27EQ for TCS), and Form 16/16A issued to deductees. Keep TAN distinct from PAN — different IDs, different purposes.

India context

Indian SMBs hiring 1-2 contractors or consultants often skip TAN application thinking 'small scale doesn't need it'. Wrong — even a single ₹50K/month payment to a freelancer requires TDS deduction, which requires TAN. Audit penalty + interest applies retroactively.

Examples

  • Salon hiring a part-time accountant at ₹40K/month — needs TAN, deducts TDS u/s 194J at 10%.
  • A SaaS startup paying agency ₹2L/month — needs TAN, deducts TDS u/s 194C at 2%.

FAQ

Is TAN the same as PAN?

No. PAN identifies a taxpayer. TAN identifies a TDS deductor. A business may have both — PAN for income tax, TAN for TDS.

Can I apply for TAN online?

Yes — via NSDL TIN portal, Form 49B. Takes 5-10 working days. ₹65 fee.

What if I don't have TAN but deducted TDS?

Pay TDS via challan with PAN reference, but get TAN immediately. Deductions without TAN can't be reported in returns properly — deductee can't claim credit.

Related concepts

TDSPANForm 16AForm 26ASGSTIN

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Related glossary entries

GSTIN — Goods and Services Tax Identification Number — a 15-character ID assigned to every GST-registered business in India.PAN — Permanent Account Number — 10-character alphanumeric ID issued by Income Tax Department, used as universal taxpayer ID.TDS — Tax Deducted at Source — mechanism where the payer deducts income tax before paying the recipient, then deposits with the government.

More in Regulatory & Tax

DPDP ActGSTINGSTR-1GSTR-3BRCM (Reverse Charge Mechanism)ITC (Input Tax Credit)RERAFSSAI
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