Tax Deduction and Collection Account Number (TAN) is a mandatory requirement for businesses and entities responsible for deducting or collecting tax at source (TDS/TCS) under the Indian Income Tax Act. Proper TAN registration and compliance ensure businesses avoid penalties and legal complications.

What is TAN and Why is it Important?

TAN is a 10-digit alphanumeric number issued by the Income Tax Department to entities required to deduct or collect tax at source. It is essential for processing TDS returns, issuing TDS certificates, and conducting tax-related transactions.

Who Needs to Obtain a TAN?

• Companies, firms, and proprietors deducting TDS from employee salaries, vendor payments, or professional fees.
• Banks, financial institutions, and government bodies involved in tax collection.
• Businesses that collect tax at source (TCS) under specified provisions.

Consequences of Not Having a TAN

• Non-deduction or non-collection of tax attracts penalties under Section 272BB.
• TDS returns cannot be filed without a valid TAN.
• Higher tax rates may be imposed due to non-compliance.

TAN Registration Process

To ensure smooth tax operations, businesses must follow a proper TAN registration process.

Step 1: Determine Eligibility

Check if your business falls under the TDS/TCS deduction category as per tax laws.

Step 2: Apply for TAN Online

• Visit the NSDL website and select ‘Apply for TAN.’
• Choose the appropriate form: Form 49B for Indian entities.
• Fill in the required details such as business name, PAN, and contact information.

Step 3: Submit the Application

• Review all details and submit the application.
• Pay the processing fee and generate the acknowledgment receipt.

Step 4: Receive TAN Allotment

• The Income Tax Department verifies the application and issues a TAN within 7-10 working days.
• Businesses can track their application status online.

Common Compliance Requirements for TAN Holders

Once TAN is obtained, businesses must comply with tax deduction and filing rules.

Timely TDS Payments

• Deduct tax at source as per the prescribed rates.
• Deposit TDS within the due dates to avoid interest charges.

Filing TDS Returns

• File quarterly TDS returns (Form 24Q, 26Q, 27Q, or 27EQ) depending on the type of transaction.
• Verify all deductee details and PAN information to avoid mismatches.

Issuing TDS Certificates

• Provide TDS certificates such as Form 16, 16A, and 27D to deductees within the stipulated time.
• Ensure correctness of tax deducted and credited in Form 26AS.

Common Mistakes to Avoid in TAN Registration and Compliance

Failure to comply with TAN regulations can lead to penalties and business disruptions. Avoid the following mistakes:

1. Incorrect or Incomplete TAN Application

• Errors in name, address, or PAN details can lead to delays.
• Double-check all entries before submission.

2. Failure to Quote TAN in TDS Payments and Returns

• Not mentioning TAN in challans, returns, and communications can lead to rejection.
• Always ensure the correct TAN is used in all tax-related filings.

3. Late Payment of TDS

• Depositing TDS after the due date attracts interest at 1.5% per month.
• Maintain a TDS payment schedule to ensure timely deposits.

4. Non-Filing or Late Filing of TDS Returns

• Late TDS filing incurs a penalty of ₹200 per day until submission.
• Ensure quarterly TDS returns are filed on time.

5. Errors in TDS Return Details

• Incorrect PAN of deductees leads to mismatched credits in Form 26AS.
• Validate deductee details using the TRACES portal before filing returns.

How ASK ASSOCIATES Helps with TAN Registration & Compliance

ASK ASSOCIATES simplifies the TAN registration and compliance process for businesses, ensuring hassle-free tax management.

Expert Assistance in TAN Registration

✔ End-to-End Application Support: We handle the TAN application process, ensuring error-free submission.
✔ Quick Processing: We expedite the process to obtain TAN within the shortest time.

Compliance and TDS Management

✔ Timely TDS Payments: We provide reminders and assist with accurate tax deduction and deposit.
✔ Quarterly TDS Return Filing: We ensure accurate reporting and timely filing to avoid penalties.
✔ TDS Certificate Issuance: We generate and distribute Form 16, 16A, and 27D on time.

Error Rectification and Compliance Audits

✔ Correction of Mismatches: We rectify PAN mismatches and other errors in TDS returns.
✔ Audit Support: We conduct compliance checks to ensure businesses meet all TAN obligations.

Conclusion

TAN registration and compliance are critical for businesses handling TDS/TCS transactions. Ensuring accuracy in registration, timely tax payments, and proper return filing helps businesses stay compliant and avoid penalties. ASK ASSOCIATES provides expert guidance and end-to-end support, making tax compliance seamless and stress-free.