TAN Registration: When and How to Apply
If your business deducts tax at source — on salaries, rent, or professional fees — you legally need a TAN before you can deposit that TDS or file returns. Here's who needs one and how to get it.
What is TAN?
TAN (Tax Deduction and Collection Account Number) is a unique 10-digit alphanumeric number issued by the Income Tax Department. Any person or entity responsible for deducting Tax Deducted at Source (TDS) or collecting Tax Collected at Source (TCS) is legally required to obtain a TAN before making such deductions.
Who Needs to Apply for TAN?
- Companies and LLPs that pay salaries above the taxable threshold and need to deduct TDS
- Businesses paying rent above ₹2,40,000 per year to a single landlord (TDS under Section 194-I)
- Businesses paying professional or technical fees above ₹30,000 per year (TDS under Section 194J)
- Proprietorships and partnership firms required to deduct TDS on contractor payments, commission, or interest
- Any entity required to collect TCS on specified transactions like sale of scrap or timber
Note: TAN is different from PAN. PAN identifies a taxpayer for income tax purposes, while TAN specifically identifies the entity as a tax deductor/collector. Both are usually needed by businesses with employees or significant vendor payments.
Documents Required
- PAN card of the business/applicant
- Certificate of Incorporation (for companies/LLPs) or business registration proof
- Address proof of the business
- Identity proof of the authorized signatory
How to Apply for TAN
- Fill Form 49B online through the NSDL/Protean TIN-Facilitation portal or apply offline through a TIN-FC center
- Submit basic business details and the category of deductor (company, individual, firm, etc.)
- Pay the prescribed processing fee
- An acknowledgment number is generated — track your application status online
- TAN is typically allotted within a few working days and the letter is sent by post and made available online
What Happens If You Don't Get a TAN?
- You cannot legally deposit TDS/TCS deducted from payments
- Banks will refuse to accept your TDS/TCS challan payments without a valid TAN
- Penalty of ₹10,000 under Section 272BB for failure to obtain TAN where required
- You cannot issue valid TDS certificates (Form 16/16A) to employees or vendors
Can I use my PAN instead of TAN for TDS purposes?
No, PAN and TAN serve different purposes. You must quote TAN — not PAN — on all TDS/TCS returns, payments, and certificates. Using PAN where TAN is required will lead to processing errors and rejected challans.
Does a small business with one or two employees need TAN?
Only if the salary paid is high enough to attract TDS deduction, or if you make payments like rent or professional fees above the threshold limits requiring TDS. Many very small proprietorships may not cross these thresholds and hence may not need TAN immediately.
Is TAN required separately for each branch of a business?
Generally one TAN is sufficient for an entire entity (PAN-based), though large organizations with multiple deducting units sometimes apply for separate TANs for each unit/branch for ease of compliance tracking.
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