Whenever you start a Business and decide to hire someone as an employee getting your TAN number comes into picture. It all originated from pay-as-you-earn-scheme initiated by the CBDT(Central Board for Direct Taxes) to generate regular source of revenue for Government. Whenever a person earns income, he is supposed to give income tax to government and the best way to track this will be to deduct tax at the source, which is the reason its important for you(who is giving income/salary to any person) to have TAN.
What is TAN
The TAN stands for the Tax deduction Account Number. The number has to be used whenever the person want to deduct in every correspondence related to TDS(Tax Deducted at Source). In simple terms TAN number is issued to individuals who are required to deduct tax on payments made by them under the Indian Income Tax Act, 1961.
Under Section 203A of the Income Tax Act, 1961, it is mandatory to quote Tax Deduction Account Number (TAN) allotted by the Income Tax Department (ITD) in all TDS returns and Challans while depositing the tax in designated Bank.
And another reason is also that TDS returns from any Individual will not be received if TAN is not quoted and challans for TDS payments will not be accepted by banks. And if you fail to apply for TAN or not using the same in the specified documents then you will be given a penalty/fine of 10,000/-
Format of a TAN
The first three Alphabets represent the city and state where the TAN was issued and fourth letter indicated the initial letter of the Tax deductor, 5 numbers and last letter makes your TAN unique.
Who should Apply for TAN
This covers what all legal bodies should have TAN. In general if you are paying a salary or a commission to any individual you can/should have TAN
- Central/State Government/Local Authority
- Statutory/ Automomous Bodies
- Branch/Division of a Company
- Individual/ Hindu Undivided Family(karta)
- Branches of Individual Business(Sole Proprietorship
- Firm/ Association of Persons/Trusts
How to Apply for TAN
Gone are the days when you have to stand in queue in government offices to get anything done. NSDL (National Securities Depository Ltd ) has made it easy for each and everyone to apply TAN from the comfort of their house by taking online applications. All you have to do is to go the NSDL website fill the form and submit it. Its really that easy!
A Person who is having PAN can only apply for TAN
Step 1. Fill the online form No. 49B which you get it here https://tin.tin.nsdl.com/tan/form49B.html
If you have any doubt in filling the form here are the guidelines https://tin.tin.nsdl.com/tan/GuidelinesTanRegistration.html
Form Filling instructuions here https://tin.tin.nsdl.com/tan/InstructionsTanRegistration.html
Step 2. Make the Fee payment which is 55/- (Plus service tax, as applicable). The fee for processing TAN application is 62/- , actually its 55 (plus applicable taxes which is service tax @ 10.20%).
This can be paid by Cash at TIN-FC counter. Or it can be send in form of Demand draft or Cheque .The demand draft or cheque shall be in favour of ‘NSDL-TIN’ payable at Mumbai. Great news is you also have option to pay by Credit Card or Net Banking.
Step 3. On successful payment by credit card / debit card /net banking a 14 digit acknowledgment number will be displayed. The Acknowlegment consists of the status of applicant, name, contact and payment details. Applicant can save and print the acknowledgment and send to NSDL (duly Signed) at the given NSDL address during submission. which should reach them within 15 days of online submission.
Step 4. Applications received with credit card / debit card / net banking as mode of payment will be issued a TAN within five working days. TAN will be intimated by e-mail. TAN allotment letter will be dispatched only on receipt of duly signed acknowledgment. you can also track the TAN status.
You are just four Step away from your TAN. Its really that simple, most of the time we think we don’t have time for all these thing and we hire a lawyer who may charge 300 for the same.
More than one TAN – In case the applicant has already been allotted a ten digit alphanumeric TAN, it should not apply again as having or using more than one TAN is illegal. However, different branches/divisions of a deductor/collector may apply for separate TAN for each branch/division.
TAN Correction – In case you already have TAN and wants any change in particulars (e.g. name, address etc.), they can fill up this form https://tin.tin.nsdl.com/tan/ChangeRequest.html
TAN Cancellation – In case duplicate TANs have been allotted to you(i.e, more then one TAN), then the TAN which you have been using regularly should be used from now also. The rest of the TANs should be surrendered for cancellation using “Form for Changes or Correction in TAN” which can be downloaded from the website of NSDL
Hence in the ending I would like to conclude that if you need a TAN for yourself its very easy and not to mention its cheap!