Tan is the abbreviation for Tax Deduction and Collection Account Number (TAN). It is a 10 digit alphanumeric number that is required to be quoted on all TDS returns under Section 203A of the Income Tax Act, 1961. The TAN number should be obtained by all such persons who are responsible for deducting or collecting taxes. Section 203A also has a penalty of Rs.10,000 in case the assessee fails to obtain the TAN number or quotes incorrect TAN number while filing the TDS returns.
Advantages of TAN Registration
- TAN Registration helps businesses to adhere to statutory guidelines as it is mandatory for entities to deduct tax at source.
- Once the TAN registration process is over, it never expires and has lifetime validity.
Utilization of TAN Number
- TAN is utilized for deductions like salary, interest, dividend and so on.
- It should be quoted in TDS/TCS returns, payment challans, and certificates that are to be issued.
- It records the address of the person who deducts tax on behalf of the IT department. Additionally, it captures the PIN that is recorded with the department.
- The individual deducting the tax at source is required to store the tax deducted to the credit of the Central Government – citing the TAN number.
- Be that as it may, a proprietorship business and different entities (i.e., Private Limited Company, LLP, and so forth ) must deduct tax at source while influencing certain payment to the contractor or sub-contractors, payment of lease surpassing Rs.1,80,000 every year and so forth.