TAN is a unique 10-digit alphanumeric number issued by the Income Tax Department of India to individuals and entities who are required to deduct or collect tax at source (TDS/TCS). It is mandatory for anyone responsible for deducting tax while making specific payments such as salary, professional fees, rent, or contractor payments.
The primary purpose of TAN is to enable the government to track and manage TDS/TCS transactions efficiently. Once you obtain a TAN, it must be quoted in all TDS returns, TCS returns, payment challans, and certificates issued under the Income Tax Act. Failure to apply for or quote TAN where required may lead to penalties.
TAN is not the same as PAN (Permanent Account Number). While PAN is used to track income and taxes paid by an individual or entity, TAN specifically relates to tax deducted or collected on behalf of the government.
For small businesses, startups, and first-time employers, getting a TAN is often one of the initial steps when setting up payroll or engaging vendors. It ensures smooth compliance with TDS rules and avoids legal or financial complications during audits or assessments.
To learn more about your income tax compliance requirements, including TDS obligations and professional support, you can visit FinTax24’s Income Tax Solutions.