What is a TAN?

A TAN (Tax Deduction and Collection Account Number) is a ten-digit alphanumeric number issued by the Income Tax (IT) department to all persons responsible for collecting or deducting tax. Under Section 203A of the Income Tax Act, 1961, it is compulsory to quote TAN on all TDS or TCS returns.

Who Should Apply for TAN?

TAN should be obtained by every person responsible for Tax Deduction at Source (TDS) or Tax Collection at Source (TCS). It is mandatory to quote TAN in all TCS or TDS transactions, including any e-TCS/TDS return, TDS/TCS payment challan and TDS/TCS certificates.

 Importance of TAN Number

Any person required to obtain a TAN will face difficulty filing tax returns when he/she does not apply for it. Failure to quote the TAN number in returns or documents will result in a penalty of Rs.10,000.

TAN should be quoted in the following documents:

• TCS or TDS statements/returns.
• Challans for TDS or TCS payments.
• Submission of TCS or TDS certificates.
• Collection or submission of a wide variety of IT-related forms.

Structure of TAN

• The TAN, being a ten-digit alphanumeric number, has a unique structure. The structure of TAN is as follows: 
• The first four digits are letters – First three letters represent the jurisdiction where the TAN is issued. The fourth letter is initial of the entity or individual applying for the TAN.
• The next five digits are numerical – The numerical in the middle are unique numbers generated by the system. 

The last digit is a letter at the end – The last one letter is a unique letter generated by the system.