TAN Registration: Who Needs It and How to Apply

Short answer: Any person or entity responsible for deducting or collecting tax at source (TDS/TCS) must obtain a Tax Deduction and Collection Account Number (TAN). This 10-digit alphanumeric number is mandatory for depositing TDS/TCS with the government and for filing quarterly returns. Without a TAN, you cannot legally manage your TDS/TCS obligations, and you risk facing a penalty of ₹10,000.

What is a TAN and why is it mandatory?

A TAN is a unique 10-digit alphanumeric code required for anyone who deducts or collects tax on behalf of the Income Tax Department. The structure is AAAA12345A. It is mandatory under Section 203A of the Income-tax Act, 1961. The primary purpose of TAN is to streamline the tracking of all tax deducted at source. It ensures that the tax deducted by you from a payment is correctly credited to the government and reflected in the Form 26AS of the person whose tax was deducted.

Without a valid TAN, TDS/TCS challans for payment will not be accepted by banks, and TDS/TCS returns will be rejected by the department. It is distinct from your PAN (Permanent Account Number), which is meant for tracking your own income tax liability.

Who is required to obtain a TAN?

Every person who is liable to deduct tax at source must apply for and obtain a TAN. This includes a wide range of entities and individuals. The most common examples are:

• Companies: All private limited and public limited companies.
• Firms: Partnership firms and Limited Liability Partnerships (LLPs).
• Individuals/HUF: Only if they are required to get their accounts audited under Section 44AB of the Income-tax Act. This typically applies to individuals running a business with turnover exceeding ₹1 crore or professionals with gross receipts over ₹50 lakh in a financial year.
• Central and State Government Bodies.
• Trusts, Associations of Persons (AOP), and Body of Individuals (BOI).

If you are an employer, you must have a TAN to deduct TDS from employee salaries. If you are a business paying for professional services, rent, or commissions above the specified thresholds, you will need a TAN. See our guide on TDS on professional fees (Section 194J).

How do I apply for a new TAN?

The application for allotment of a new TAN is made using Form 49B. You can apply through two primary methods:

1. Online Application: This is the quickest and most common method. You can fill and submit Form 49B directly on the NSDL e-Governance TIN website. After filling the form with details like the deductor's name, address, PAN, and responsible person's details, you can make the payment for the prescribed processing fee online via net banking, debit/credit card, or UPI. An acknowledgment screen with a 14-digit number will be displayed, which should be saved for future reference.

2. Offline Application: You can download Form 49B from the TIN website, fill it in block letters, and submit it at any of the designated TIN Facilitation Centers (TIN-FCs) managed by NSDL. The application fee is paid in cash or by demand draft at the center. They will provide a unique 14-digit acknowledgment number as proof of application.

The processing fee is nominal, typically around ₹55 plus applicable GST.

What documents are required for a TAN application?

No physical or digital documents are required to be submitted along with the application for TAN allotment (Form 49B). The application is processed based on the information provided in the form itself. This makes the process simple and fast. However, it is crucial to ensure that the details entered in the form, especially the PAN of the entity and the responsible person's details, are accurate and match the Income Tax Department's records to avoid rejection or the need for later corrections.

Can I use my PAN instead of a TAN?

Generally, no. PAN and TAN are for different purposes and are not interchangeable. However, the Income-tax Act provides specific exceptions where an individual or HUF (who is not required to get their accounts audited) can use their PAN for TDS purposes instead of obtaining a TAN. This simplifies compliance for individuals making specific high-value personal transactions.

Scenario	Responsible Person	TAN Required?	What to Quote	Applicable Section	Internal Link
Company paying salary	Company	Yes	TAN	Section 192	TDS on Salary
Firm paying professional fees > ₹30,000	Partnership Firm	Yes	TAN	Section 194J	TDS on Professional Fees
Business owner (audit required) paying rent	Individual / HUF	Yes	TAN	Section 194-I	GST on Rent
Salaried individual buying a flat for ₹70 lakh	Individual Buyer	No	PAN	Section 194-IA	TDS on Property Purchase
Salaried individual paying rent of ₹60,000/month	Individual Tenant	No	PAN	Section 194-IB	TDS on Rent
Individual paying a contractor ₹60 lakh for house construction	Individual (not for business)	No	PAN	Section 194M	TDS on Contractors

What are the penalties for not having a TAN?

Failure to comply with TAN provisions can lead to significant penalties. Under Section 272BB of the Income-tax Act, 1961, the Assessing Officer can levy a penalty of ₹10,000 for the following failures:

1. Failing to apply for and obtain a TAN when required.
2. Failing to quote the TAN in challans, TDS/TCS certificates, returns, and other prescribed documents.
3. Quoting an incorrect TAN.

This penalty is in addition to any other consequences, such as interest for late deposit of TDS or fees for late filing of returns.

Worked example

Let's consider Zenith Startups Pvt. Ltd., a newly registered private limited company in Bengaluru. They have just hired their first employee, Anjali, with a monthly salary of ₹1,20,000.

• Liability: Anjali's annual salary is ₹14,40,000, which is well above the basic exemption limit. Zenith Startups is therefore required to deduct TDS from her salary every month under Section 192.
• Action Required: Before paying the first month's salary, the company must obtain a TAN.
• Step 1: Application: The company's director, Rohan, goes to the NSDL-TIN website to apply for a TAN.
• Step 2: Form Filling: He selects Form 49B and fills in the company's details: legal name (Zenith Startups Pvt. Ltd.), registered address, the company's PAN, and his own details as the responsible person.
• Step 3: Payment: He pays the application fee of ₹65 (₹55 + 18% GST) online using the company's bank account.
• Step 4: Acknowledgment: An acknowledgment slip with a 14-digit number is generated. Rohan saves a PDF copy of this.
• Step 5: Allotment: Within four working days, the company receives an email with their new 10-digit alphanumeric TAN.
• Step 6: Compliance: Zenith Startups can now use this TAN to deposit the TDS deducted from Anjali's salary and file its quarterly TDS return (Form 24Q).

By taking this proactive step, Zenith Startups ensures it is fully compliant from day one, avoiding a potential ₹10,000 penalty.

Common mistakes

1. Delaying the application: Many new businesses pay salaries or other expenses liable to TDS before applying for a TAN, leading to non-compliance from the very first transaction.
2. Assuming PAN can always be used: Business owners often mistakenly believe their PAN is sufficient for all tax purposes, failing to realise that TAN is mandatory for business-related TDS.
3. Incorrectly quoting PAN: Entering the PAN in the TAN column of a TDS return will cause the entire return to be rejected by the system.
4. Data Mismatch: Providing a name or address in the TAN application that does not match the details linked to the PAN can cause delays or rejection.
5. Forgetting about Changes: Failing to update the TAN data (e.g., change of address or responsible person) by filing a correction form can lead to communication gaps with the tax department.

How SP & SC helps

Navigating TDS compliance can be complex for busy founders and business owners. SP & SC Legal and Taxation Services simplifies this entire process for you. We assist with the TAN application, ensuring it's done correctly and promptly. More importantly, we provide end-to-end TDS compliance management, from calculating monthly TDS liability and ensuring timely deposits to preparing and filing accurate quarterly TDS returns. Our goal is to keep you compliant and penalty-free so you can focus on your core business. Learn more about our TDS Return Filing services.

Frequently asked questions

How long does it take to get a TAN?

Typically, a TAN is allotted within 5 to 7 working days after a successful application is submitted and the payment is confirmed. You can track your application status on the NSDL-TIN website using the 14-digit acknowledgment number.

Can I have more than one TAN?

No. A person or entity is allowed to have only one TAN. Obtaining or possessing more than one TAN is against the law. If you have been allotted multiple TANs by mistake, you should apply for cancellation of the unused numbers immediately.

What if I need to change details in my TAN?

If there are any changes in the data associated with your TAN, such as a change in address, responsible person, or contact details, you must submit a 'Form for Change or Correction in TAN data'. This ensures the tax department's records are always up to date.

How can I check the status of my TAN application?

You can check the status online on the NSDL-TIN portal. Go to the 'Services' tab and select 'TAN'. Then, click on 'Know Status of Your Application' and enter your 14-digit acknowledgment number.

Is TAN required for GST?

No, TAN is a requirement under the Income-tax Act for TDS and TCS. For the Goods and Services Tax (GST) regime, you need a GST Identification Number (GSTIN). While there is a concept of TDS under GST, it applies mainly to government departments and agencies, and the compliance is managed through the GST portal using a GSTIN, not a TAN.

Get a fixed-fee quote

Navigating tax compliance is critical for every business. Let our experts handle it for you. Share your documents with us, and we will provide a written, fixed-fee quote for our services. We can help you with everything from TAN application to TDS return filing, end to end. Contact SP & SC today or WhatsApp us at +91 90356 74566 to get started.