If you are a taxpayer or will pay taxes for the first time, you may be familiar with the term ‘TAN’. The Tax Deduction Account Number (TAN) is a unique 10-digit alphanumeric code issued by the Income Tax Department of India. 

 

It is compulsory for all entities that are required to deduct tax at source (TDS). Applying and completing the TAN registration process on the tax portal ensures compliance with tax laws, Moreover, it helps avoid penalties associated with non-compliance. 

 

Read on to learn more about the process of TAN registration on the Income Tax Portal. 

What is TAN?

TAN is a term which comes under Section 203A of the Income Tax (1961). It is a unique 10-digit code issued to you by the IT department, if you are required to deduct tax at a source or collect tax at a source. 

 

The primary purpose of TAN is to identify the tax deductor or collector and ensure that their tax payments are credited to the correct account. Therefore, the TAN registration number is quoted on all TDS/TCS returns, challans, and certificates submitted to the Income Tax Department.

 

TAN has a unique structure and helps streamline the tax deduction and collection process.

  • The first 4 characters are alphabets, followed by 5 digits in binary form, and the last character is again an alphabet.

  • The first 3 alphabets of the TAN represent the authority codes.

  • The initial alphabet of the 4th digit of the TAN represents the name of the TAN holder, which can be an individual or a business entity.

Documents Required for TAN Registration

To complete TAN registration on the Income Tax Portal, you must provide a few mandatory documents as per the income tax regulations. These documents are proof of identity, address, and other relevant details required for TAN registration.

  • Aadhaar Card

  • PAN Card

  • Personal details and signature

  • Incorporation certificate of LLP and firms

  • Acknowledgement slip

Steps for TAN registration on Income Tax Portal

The registration process for TAN is a simple procedure that can be done online. Here are the steps to help you learn how to register TAN on the income tax portal.

  • Step 1: Visit the TRACES website and click on 'Continue'

  • Step 2: Select 'Register as a New User' and choose 'Deductor' as the user type

  • Step 3: Fill in the TAN and the Captcha code to proceed

  • Step 4: Choose a communication address and provide your contact details

  • Step 5: The form type, financial year, and KYC quarter will be auto-populated, and you will need to enter your token number manually

  • Step 6: Fill in the organisation details of the deductor, including PAN, deductor category, and DOB of the authorised person

  • Step 7: Create a user ID and password

  • Step 8: Review the information on the confirmation screen, make any necessary edits, and click 'Confirm' to complete the registration process

  • Step 9: You will receive an activation link with a code via email and mobile number.

  • Step 10: You will receive registration details within 48 hours after activation

Steps for TAN User ID Activation on the Income Tax Portal

Once you have successfully registered for your TAN user ID on the Income Tax portal, you must activate it to access various TAN-related services. Here are the steps to activate your TAN user ID on the Income Tax portal:

  • Step 1: Go to the Income Tax portal online and click on the 'Login Here' button

  • Step 2: Enter your TAN user ID and password and proceed to login

  • Step 3: Click the 'Activate your Account' link to activate your user ID

  • Step 4: Enter the OTP sent on the registered mobile number and click on 'Validate' to proceed

  • Step 5: On the next screen, you will need to create a new password for your TAN user ID.

  • Step 6: Enter the new password in the given field and click 'Submit' to complete the activation process

 

Once you have completed the above steps, your TAN user ID will be activated. The Income Tax portal lets you access various TAN-related services such as TDS/TCS statements, challans, certificates, and more. Keep your password safe and secure, and do not share it with anyone.

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Benefits of TAN Registration

Obtaining a Tax Deduction and Collection Account Number (TAN) is a crucial requirement for any entity responsible for deducting or collecting taxes. Here are some benefits of obtaining a TAN:

  • By obtaining a TAN, you can ensure compliance with tax laws and avoid legal action or penalties for non-compliance. It is mandatory for all entities responsible for deducting or collecting tax at source.

  • With a TAN, you can streamline tax deduction and collection processes. This helps you deduct and remit taxes to the government promptly and error-free, avoiding any delays or mistakes in the process.

  • Having a TAN facilitates easier tracking and reconciliation of tax payments. You can easily access your TDS/TCS statements and certificates, ensuring that you have deducted and remitted the correct amount of tax. This makes it easier to keep track of your tax payments and ensure compliance with tax laws.

Penalties for Non-compliance

Non-compliance with TAN registration requirements can attract penalties under the Income Tax Act of 1961.

 

Here are some of the penalties that can be imposed for non-compliance with TAN registration:

  • If you fail to obtain TAN despite being required, you may have to pay a penalty of ₹10,000 as per Section 272BB of the Income Tax Act, 1961.

  • You must register for TAN within the specified timeframe. If you fail, you can be penalised ₹10,000 under Section 272BB of the Income Tax Act, 1961.

  • Providing incorrect information while registering for TAN can attract a penalty of ₹10,000 under Section 272B of the Income Tax Act, 1961.

  • Non-compliance with TAN registration requirements may result in legal action, fines, and imprisonment. So, comply with the TAN registration process to avoid any such penalties or legal actions.

 

Since non-compliance regarding TAN registration can attract a penalty, ensure you don’t overlook it. Moreover, it streamlines tax deduction and collection processes and facilitates easier tracking and reconciliation of tax payments. Therefore, you should complete TAN registration online and ensure compliance with tax laws to avoid penalties and legal action.

FAQs on TAN Registration

What documents are required for TAN registration?

You will need to provide your PAN, address proof, and identity proof documents to register for a TAN.

Can a TAN be surrendered?

Yes, you can surrender your TAN if you no longer need it. You can submit a surrender request to the income tax department.

Can I use PAN instead of TAN?

No, you cannot use PAN in place of TAN. TAN and PAN have different purposes and are allotted to different entities. TAN is a unique identification number that is required if you are responsible for deducting or collecting tax at source. 

PAN is used to identify you as individual taxpayers, companies, and other entities. Therefore, TAN should always be used in the relevant field instead of PAN.

Do I need to mention TAN while filing e-TDS returns?

Yes, you must mention TAN while filing e-TDS returns. It is mandatory to quote TAN in TDS, and TCS returns, whether filed offline or online.

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