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TAN - TDS Filing & Compliances

TAN or Tax Deduction and Collection Account Number is a 10 digit alpha numeric number required to be obtained by all persons who are responsible for deducting or collecting tax. Under Section 203A of the Income Tax Act, 1961, it is mandatory to quote Tax Deduction Account Number (TAN) allotted by the Income Tax Department (ITD) on all TDS returns.

Since last few years ITD has revised the structure of TAN. It is a unique 10 digit alphanumeric code. Accordingly, they have issued TAN in this new format to all existing TAN holders.

To facilitate deductors find their new TAN, ITD has now introduced a search facility in their website (www.incometaxindia.gov.in). Through this facility deductors can search on their name and old TAN to find the new TAN. Deductors are advised to find the new TAN from this site before it is incorporated in their e-TDS return file to avoid any inconvenience at the time of furnishing e-TDS return.

TDS Returns Filing

Non Salary
TDS on Salary
Foreign Pay
All About TDS

Importance of TAN?

(a) TDS statements i.e. returns
(b) TCS statements i.e. returns
(c) Statement of financial transactions or reportable accounts
(d) Challans for payment of TDS/TCS
(e) TDS/TCS certificates
(f) Other documents, as prescribed

Action on Default?

Section 272BB of the Income Tax Act 1961 provides for a penalty of Rs. 10,000 in case the entity or individual collecting or deducting tax, fail to get the TAN or furnishes incorrect TAN details on the required documents.

Know TDS on Salary

Who allots TAN?

Income tax department allots TAN

Why is TAN necessary?

As mentioned above, TAN is needed for quoting it while filing TDS/TCS/Annual Information Returns, payment challans, and certificates. If the 10-digit alphanumeric number is not quoted, the returns filed are not accepted by the TIN facilitation centres in the country while banks do not accept the challans for TDS/TCS payments. It needs to be mentioned that if an individual who is required to have TAN does not apply for it, he/she attracts a penalty of Rs.10,000.

What is the structure of TAN?

As a 10-digit alpha-numeric identifier, TAN has a unique structure. With the first four letters at the beginning, TAN has five numerals in the middle and a letter at the end. The components of TAN represent the following:

a. The first three letters represent the jurisdiction where the TAN was issued
b. The fourth alphabet in the TAN is the initial letter of the name of the individual or entity deducting or collecting tax
c. The remaining six characters (five numerals and the last alphabet) are system-generated.

A combination of these components gives TAN a unique identity.

Do I need separate TANs for TCS and TDS?

A single TAN Number in India can be used both for TCS and TDS, and hence you don’t need to make multiple applications. if once you get your TAN Number, it can be used for all type of deductions and collections. It is illegal for individuals or entities to hold or use more than one TAN. However, a single entity may acquire different TANs for its different branches or divisions.

For individuals or businesses paying salary or commission to anyone, possessing TAN is mandatory. In case you’re unable to remember your TAN, the Income Tax Department makes a ‘Know your TAN’ provision whereby you can find out your TAN online by filling in the requisite details.

What are the types of TAN application?

TAN applications are of two types – application for allotment and application for change or correction.

1. Application for allotment of new TAN: The application can be made online on the NSDL-TIN website or downloaded to submit it offline. It asks for details like name, address, contact number, nationality, PAN, existing TAN etc. Applicants need to pay a TAN application processing fee of Rs 65 (Rs 55 as application charge + 18% GST).

2. Application for change or correction in TAN data for allotted TAN: The change or correction form requires details like the 10-digit TAN, category of the deductor, name, address, nationality, PAN, and TAN(s), if allotted. It also has rows to mention the changes/correction required. Applicants need to prove allotment of TAN by submitting TAN allotment letter issued by Income Tax Department or a print out of the TAN details. The fee charged for correction application is Rs63 (plus service tax, as applicable).

How to make an application for TAN allotment?

Application for TAN Allotment can be made both online and offline. There are certain set of pre written guidelines for that.

1. Online Application: TAN application may conveniently be made online by visiting the NSDL-TIN website (www.tin-nsdl.com). An acknowledgement will appear on screen on confirmation of correct uploading of the TAN allotment application.

2. Offline application: If an applicant chooses the offline mode, s/he should visit the nearest TIN Facilitation Centre (TIN-FC) and submit the application in Form 49B in duplicate. The addresses of TIN-FC are given on the NSDL-TIN website.

How Is TAN Different From PAN ?

The Permanent Account Number (PAN) must be possessed by all to file his/her Income Tax returns. While Tax Deduction and Collection Number (TAN) is required by only those assesses who are liable to deduct TDS or collect TCS under the Income Tax Act.

How to Search TAN?

An applicant can search the TAN details either by providing the name or TAN. If you have forgotten TAN, it can be retrieved by following the steps mentioned below:

  • Visit www.incometaxindiaefiling.gov.in
  • Click on ‘Know Your TAN’
  • Select ‘Name’ under the ‘TAN Search’ option
  • Select ‘Category of Deductor’
  • Select ‘State’
  • Provide ‘Name’
  • Provide the registered mobile number
  • Click on ‘Continue’
  • Insert the One Time Password (OTP) sent on the registered mobile number in the corresponding screen
  • Next, click on ‘Validate’
  • The details are displayed on the corresponding screen.
How to know TAN?

To know one’s TAN, the process involved is the same as the one when it comes to searching for TAN. The detailed process involved to know one’s TAN is as mentioned below:

  • Visit www.incometaxindiaefiling.gov.in
  • Click on ‘Know Your TAN’
  • Select ‘Name’ or ‘TAN’ under the ‘TAN Search’ option
  • Select ‘Category of Deductor’
  • Select ‘State’
  • Provide ‘Name’ under ‘TAN Search’
  • Provide the registered mobile number
  • Click on ‘Continue’
  • Insert the One Time Password (OTP) sent on the registered mobile number in the corresponding screen
  • Next, click on ‘Validate’
  • The details are displayed on the corresponding screen

​All about Tax Deducted at Source (TDS)

TDS is basically a part of income tax. It has to be deducted by a person for certain payments made by them. In this article, we will discuss in detail about the TDS provisions under the Income Tax Act.

1. What is TDS?


TDS or Tax Deducted at Source is income tax reduced from the money paid at the time of making specified payments such as rent, commission, professional fees, salary, interest etc. by the persons making such payments.

Usually, the person receiving income is liable to pay income tax. But the government with the help of Tax Deducted at Source provisions makes sure that income tax is deducted in advance from the payments being made by you.

The recipient of income receives the net amount (after reducing TDS). The recipient will add the gross amount to his income and the amount of TDS is adjusted against his final tax liability. The recipient takes credit of the amount already deducted and paid on his behalf.

For instance:

Shine Pvt Ltd make a payment for office rent of Rs 80,000 per month to the owner of the property.

TDS is required to be deducted at 10%. Shine pvt ltd must deduct TDS of Rs 8000 and pay balance Rs 72,000 to the owner of the property.

Thus the recipient of income i.e. the owner of the property in the above case receives the net amount of Rs 72,000 after deduction of tax at source. He will add gross amount i.e. Rs 80,000 to his income and can take credit of the amount already deducted i.e. Rs 8,000 by shine pvt ltd against his final tax liability.

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2. When should TDS be deducted and by whom?


Any person making specified payments mentioned under the Income Tax Act are required to deduct TDS at the time of making such specified payment. But no TDS has to deducted if the person making the payment is an individual or HUF whose books are not required to be audited.

However, in case of rent payments made by individuals and HUF exceeding Rs 50,000 per month, are required to deduct TDS @ 5% even if the individual or HUF is not liable for a tax audit. Also, such Individuals and HUF liable to deduct TDS @ 5% need not apply for TAN.

Your employer deducts TDS at the income tax slab rates applicable. Banks deduct TDS @10%. Or they may deduct @ 20% if they do not have your PAN information. For most payments rates of TDS are set in the income tax act and TDS is deducted by payer basis these specified rates.

If you submit investment proofs (for claiming deductions) to your employer and your total taxable income is below the taxable limit – you do not have to pay any tax. And therefore no TDS should be deducted on your income. Similarly, you can submit Form 15G and Form 15H to the bank if your total income is below taxable limit so that they don’t deduct TDS on your interest income.

In case you have not been able to submit proofs to your employer or if your employer or bank has already deducted TDS and your total income is below the taxable limit) – you can file a return and claim a refund of this TDS.

The complete list of Specified Payments eligible for TDS deduction along with the rate of TDS.

3. What is the due date for depositing the TDS to the government?


The Tax Deducted at Source must be deposited to the government by 7th of the subsequent month.

For instance:

TDS deducted in the month of June must be paid to the government by 7th July. However, the TDS deducted in the month of March can be deposited till 30th April.

For TDS deducted on rent and purchase of property, the due date is 30 days from the end of the month in which TDS is deducted.


4. How to deposit TDS?


Tax Deducted at Source has to be deposited using Challan ITNS-281 on the government portal.

Read our article for a step by step guide to deposit TDS.

5. How and When to file TDS returns?

Filing Tax Deducted at Source returns is mandatory for all the persons who have deducted TDS. TDS return is to be submitted quarterly and various details need to be furnished like TAN, amount of TDS deducted, type of payment, PAN of deductee, etc. Also, different forms are prescribed for filing returns depending upon the purpose of the deduction of TDS. Various types of return forms are as follows:

Form 26Q TDS on all payments except salaries

Q1 – 31st July

Q2 – 31st October

Q3 – 31st January

Q4 – 31st May

Form NoTransactions reported in the returnDue date
Form 24QTDS on SalaryQ1 – 31st July

Q2 – 31st October

Q3 – 31st January

Q4 – 31st May

Form 27QTDS on all payments made to non-residents except salariesQ1 – 31st July

Q2 – 31st October

Q3 – 31st January

Q4 – 31st May

Form 26QBTDS on sale of property30 days from the end of the month in which TDS is deducted
Form 26QCTDS on rent30 days from the end of the month in which TDS is deducted

6. What is a TDS Certificate?


Form 16, Form 16A, Form 16 B and Form 16 C  are all TDS certificates. TDS certificates have to be issued by a person deducting TDS to the assessee from whose income TDS was deducted while making payment.


For instance, banks issue Form 16A to the depositor when TDS is deducted on interest from fixed deposits. Form 16 is issued by the employer to the employee.

FormCertificate ofFrequencyDue date
Form 16TDS on salary paymentYearly31st May
Form 16 ATDS on non-salary paymentsQuarterly15 days from due date of filing return
Form 16 BTDS on sale of propertyEvery transaction15 days from due date of filing return
Form 16 CTDS on rentEvery transaction15 days from due date of filing return

  

7. TDS credits in Form 26AS

It is important to understand how TDS is linked to your PAN. TDS deductions are linked to PAN numbers for both the deductor and deductee. If TDS has been deducted from any of your income you must go through the Tax Credit Form 26AS. This form is a consolidated tax statement which is available to all PAN holders. Since all TDS is linked to your PAN, this form lists out the details of TDS deducted on your income by each deductor for all kinds of payments made to you – whether those are salaries or interest income – all TDS linked to your PAN is reported here. This form also has income tax directly paid by you – as advance tax or self assessment tax. Therefore, it becomes important for you to mention your PAN correctly, wherever TDS may be applicable on your income.

8. SMS Alerts for Higher Transparency

The income tax department has been sending SMS to the taxpayers from VK-ITDEFL that mentions the amount of tax deducted at source (TDS) against the PAN (Permanent Account Number) of the taxpayer. The SMS alert will let you know the TDS credited in respect of your income from salary, interest etc., every quarter. The amount of TDS would stand accumulated in your Form 26AS for the respective financial year.

This initiative was implemented by the Finance Ministry to increase transparency and reduce the cases of TDS mismatches at the time of income tax filing. Taxpayers can cross-check the information provided in the SMS with the information on the payslips to make sure that there is no mismatch. TDS mismatch could be a common reason for incorrect income tax return filing.

9. Tax liability in a case where TDS is already deducted from Income

On salary, TDS is deducted based on the income tax slab applicable to you. In the case of other income types, the TDS rates are fixed and vary between 10% and 20%. The tax rates are not based on your total income. Hence, you would suffer a TDS on your receipts in certain cases.

Separately, you would be required to calculate your annual income by aggregating income from all sources. Your actual tax liability would be calculated on the total taxable income.

From the taxes calculated, you can claim credit for TDS deducted on your various receipts. Reduce the tax deducted at source from your actual tax liability to know the balance to be paid to the income tax department. You may have a refund too. In both cases, you have to file an income tax return and pay the tax due or claim a refund.