What Exactly Is TAN? And Its Importance For Individuals & Businesses

What is TAN number?

A TAN is a unique number of ten-digits issued in India to persons who are subject to the Income Tax Act, 1961 in order to decrease or levy taxes on the money paid by them.

The TDS (tax deducted at source) or indirect taxes levied by India on payments made is classified as TAN. This enables the assessor to claim the TDS in their total income for their annual tax returns.

If you do have an MSME licence, the Tax law mandates you to use a specific form named (Form 49B) to request for TAN, which you may fill on the NSDL website. Furthermore, the Indian government has appointed NSDL (National Securities Depositories Ltd) as the TAN certification intermediary.

In this blog, we will discuss

TAN Number India

During the application process, just evidence of identification and proof of residence are required. Furthermore, while filing for a TAN, you must provide to NSDL the hardcopy confirmation obtained as well as address documentation.

The TAN should be included on all TDS or TCS documentation and certifications, and on all TDS or TCS credentials and challans.

Financial institutions or banks may decline to accept a TCS or TDS challan, return, or document if the TAN is not stated. Despite having an Aadhar card, the Income Tax Law levies a Rs. 10,000 fine if you fail to obtain a TAN or fail to put it on the necessary returns, challans, or certifications.

The TAN is structured as follows:

• The very first four characters are alphabetic, the next five are numeric, and the last letter is still an alphabet. Here’s an example of it: GHIJ67890M.
• The initial three characters identify the city or region where you obtained your TAN. The fourth element similarly expresses the first letter of the deductor’s identity.
• The following five characters are numeric, with an alphabet post them.

Non-resident and TAN

TAN becomes significant when a non-resident of India sells his residence to a resident Indian. The purchaser must determine whether the non-resident person has a PAN. If a non-resident person does not already have a PAN card, they must apply for it.

Due to recent modifications to the income tax law, every estate transfer worth more than Rs. 50 lacs now qualifies for a 1% exemption at the origin. The purchaser needs to pay 1% of the property’s value and get registered with the government of India.

The purchaser’s TAN- is needed to be specified when reporting the TDS. The claim of TAN is not necessary if the property is bought from a resident of India. Nonetheless, if you purchased the estate from a non-resident, you would be required to show the TAN.

The Importance of TAN for Organisations

TAN identity is an important identification for firms when filing tax returns. The Indian government mandates all businesses, irrespective of size, to register for a TAN.

The relevance of TAN may be recognized by the fact that every firm is required to deduct TDS on payments sent to vendors, suppliers, staff, or subcontractors that are above a certain level.

There are various restrictions for several means of payment.  TDS charge is required if the rent exceeds Rs 1,80,000 or the expert fee exceeds Rs 30,000. Businesses that use these services have a critical role in these situations for deducting tax at the origin/source, which mandates the use of a TAN.

Who may register for TAN benefits?

As earlier mentioned, every person who is still required to receive or withold TCS is still entitled for a TAN.

A person obligated to deduct tax under section 194-IA, and on the other hand, can use PAN rather than TAN because a TAN is not necessary. Moreover, an individual who is required to deduct taxes under sections 194-IB or 194M is exempt from obtaining a TAN.

If a resident’s income exceeds the amount Rs. 50,000 in a month or fraction of month, they must register for TAN.

How To Get Tan Number

In general, there are two ways to obtain a valid TAN –

Offline way- 

A request for TAN issuance in copy of Form No. 49B must be filed at any TIN-FC (TIN Facilitation Centre). In the instance of the applicant who is a firm that is not incorporated as per the Companies Act, 2013, a request for Tax Deduction Account Number may be filed in Form No INC-7.

Online way- 

An application requesting TIN allocation may be filed online by submitting form-49B to the NSDL’s official site.Following the submission of the form, the candidate must pay the TAN registration cost of Rs 62. The fee can be paid in cash, by demand draft, cheque or through net banking. When payment is successfully made, an acknowledgement number of 14-digit is created. 

Following 15 days of submitting the online form, the applicant must send the legally signed acknowledgement besides the requisite papers to the NSDL. The TAN card will be provided to the applicant once the papers and application have been validated by NSDL.

How To Know My Tan Number?

An applicant can obtain TAN information by supplying their name or TAN. If you have forgotten your TAN, you can know your TAN number by following the methods outlined below:

1. Go to Income Tax E-Filing Portal by clicking on this link www.incometaxindiaefiling.gov.in, then you will notice the Know Your TAN number option shown under toolbars which is on the left side of the Home page.
2. Select ‘Know Your TAN.’
3. Choose ‘Name’ from the ‘TAN Search’ menu.
4. Choose ‘Deductor Category’.
5. Choose ‘State.’
6. Enter ‘Name’ here.
7. Please provide your registered mobile phone number.
8. Click the ‘Continue’ button.
9. In the relevant screen, enter the One Time Password (OTP) issued to the registered phone number.
10. Then, click ‘Validate.’
11. The information is presented on the related screen.

Conclusion

If you operate a business and engage in TCS or TDS, you should obtain Tan authorization as early as possible. Furthermore, Flexiloans can assist you if you are searching for a commercial loan to begin your enterprise in order to receive a TAN. You may acquire a hassle-free collateral free loan at  lowest interest rates at FlexiLoans.