TCS stands for Tax Collection at Source and TDS stands for Tax Deduction at Source. In simple words, TCS and TDS are the methods by which an individual or a company responsible can pay the taxes of their employees or buyers directly to the government.
You can apply for TAN online or offline, depending on your preference. You can visit the NSDL website (https://www.tin-nsdl.com/) or any TIN-FC (Tax Information Network-Facilitation Centre) to apply for TAN offline.
No. A single TAN is valid for both the TDS as well as the TCS purpose.
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It is when an individual or a company is requesting for issuing a TAN for the first time. Once you apply for a new TAN, a new and unique TAN number is generated in your or your company’s name.
It is when you already have a valid existing TAN but just need some corrections done. In this case, no new TAN is generated for you or your company, but just your old details are replaced with new ones in your existing TAN.
How to apply for TAN?
There are two modes of applying for a TAN. The steps of applying through both are discussed below in detail.
Step 1: Go to the official TAN application website, i.e., TIN-NSDL.
Step 2: A drop-down menu will be present in the upper left corner of the page, click on it and from there click on TAN.
Step 3: Now, another dropdown menu will be present in the upper left corner of the page, click on apply online and then click on new TAN.
Step 4: Read all the given instructions, choose your category type, and click on select.
Step 5: Now, fill the Form 49B, with correct and established details.
Step 6: Now comes the time to make your payment for the TAN application. Choose a payment option from the dropdown dialogue box and then click on submit.
Step 7: After clicking on submit, the payment page will appear. From there make your payment using your desired method, e.g., Cheque, Challan, etc.
Step 8: Once the TAN is successfully registered, a message or an email will be sent to your registered mobile number or Email-ID, respectively.
Step 9: Click on the link provided on the official TAN application site and fill in your TAN registration number and user ID.
Step 10: Lastly, click on submit. Your TAN is successfully applied.
Step 1: Go to the official site of NSDL or UTIITSL.
Step 2: From there download Form 49B and fill in all the required details.
Step 3: Sign the Acknowledgement receipt and Cheque for the TAN application fee.
Step 4: Now, send the filled Form 49B, Acknowledgement receipt, and Cheque to your nearest NSDL or UTIITSL office.
Step 5: The offline method can take up to 7-15 working days.
Step 6: Once the TAN is successfully registered, a message or an email will be sent to your registered mobile number or Email-ID, respectively.
Step 7: Click on the link provided on the official TAN application site and fill in your TAN registration number and user ID.
Step 8: Lastly, click on submit. Your TAN is successfully applied.
Penalties for quoting incorrect tax:
The Income Tax Department of India imposes a penalty of Rs 10,000 in two cases for failing to comply with the provisions of obtaining or quoting TAN.
Firstly, as per Section 272BBB of the Income Tax Act, 1961, persons liable to collect or deduct tax who fail to comply with the provisions of Section 206CA will be charged a penalty. Section 206CA requires TAN to be quoted on all documents specified under the given section.
Secondly, Section 272BB (1) states that any person who fails to comply with the provisions of Section 203A will also be liable to pay a penalty of Rs 10,000. This means that any person required to collect or deduct tax at source must obtain TAN as per Section 203A, and if they fail to do so, they will be charged a penalty.
Finally, Section 272BB(1A) provides for cases where persons liable to deduct or collect tax at source quote an incorrect TAN on documents such as TDS/TCS Certificates, TDS/TCS Returns etc. In such cases, they will also be liable to pay a penalty of Rs 10,000.
While applying for a TAN, the following documents are required –
• For Individual application
Applicant’s PAN number.
Common Personal Information of the applicant.
• For Company application
Digital Signature Certificate (DSC)
• TAN Verification
The verification of TAN, also known as ‘know your TAN’ can be done online by following the steps listed below.
Step 1: Firstly, go to the official website of the Income Tax Department, then go to TAN services, from there enter the ‘know your TAN’ portal.
Step 2: Secondly, login to the online ‘e-filing’ portal – https://www.incometax.gov.in/iec/foportal/
Step 3: Now, below the ‘Quick Links’ dialogue box, click on the ‘know your TAN’ option.
Step 4: By following the above step, you will be directed to a new page that has the ‘TAN Search’ option. In there, according to your preference of ‘NAME’ or ‘TAN’, you can choose either of the options.
Step 5: Now, choose the ‘Category of Deductor’ and ‘State’ from the dropdown menu.
Step 6: Enter either your ‘NAME’ or ‘TAN’ and then enter your ‘Contact Details’, i.e., your phone number.
Step 7: Click ‘Continue’ to receive an OTP on the phone number that you just entered in the above step.
Step 8: Now, enter the OTP in the available dialogue box and then click on the ‘Validate’ button.
Step 9: Your TAN has now been successfully verified. To view your TAN details go to the same link mentioned in step 1, i.e., https://www.incometax.gov.in/iec/foportal/
• Customer Care for TAN
Once you have applied for your TAN or requested an update on your existing TAN, you can find out the status of your application in two ways –
The toll-free number to know the status of your TAN application is: 020-27218080.
The status of your TAN application can also be known by sending an SMS to 57575 after typing ‘NSDLTAN’, where NSDL stands for National Securities Depository Limited and TAN stands for Tax Deduction Account Number.
When talking about TAN, we often come face to face with the terms TDS and TCS. Let us discuss both of these terms in detail. TAN stands for Tax Deduction and Collection Account Number. It is a 10-digit alphanumeric code issued by the Income Tax Department of India to individuals and entities who are required to deduct or collect tax on payments made by them. Section 203A of the Income Tax Act, of 1961 provides that every person deducting tax or collecting tax at source is required to apply for Tax Deduction and Collection Account Number (TAN). If you are a business or an individual who is required to deduct or collect tax at source, you must obtain a TAN. There are certain cases in which the person making the prescribed payments are required to deduct the tax at the source itself. This is known as Tax Deduction at Source or TDS. Here, the person who pays the tax is known as the deductor and the person who pays the tax is known as the deductee. Whereas, there are certain cases in which a seller, selling some prescribed products, collects the tax from the buyers at the source itself. This is known as Tax Collection at Source or TCS. Here, the seller is known as the collector and the buyer is known as the collectee.
It is essential to quote at the time of Income Tax Return filings if an individual or a company conducts TDS and TCS. If an individual or a company fails to state their TAN number in any Income Tax Return filings then they will be subject to legal punishments which can either be in the form of monetary penalties or even in the form of time in prison.
Who should apply for TAN?
Every individual or every company that collects/deducts taxes at the source should apply for a TAN. In simple words, if you are someone who pays salary and wants the burden of paying taxes off of the shoulders of your employees or you run a business where you sell certain products to the buyers and wants your buyer to be free of the burden of paying the taxes themselves that are levied on those products then you should apply for TAN. As an employer or as a seller, it will allow you to deduct or collect taxes from employees or buyers, respectively, and pay it directly to the government. It has several benefits such as all the taxes will be paid in bulk, on time, directly to the government, and will reduce last-minute chaos. Exception of the above-mentioned provisions are as follows:
Persons deducting tax under section 194-IA of the Income Tax Act can use PAN instead of TAN as such persons need not require TAN.
The persons deducting tax under section 194-IB or section 194-M need not obtain TAN.
Follow the general instructions listed below while furnishing the digital signature application form:
• The signature of the applicant should be in blue ink only
• The signature of the applicant should be as it is in the Identity Proof
• A photo of the applicant in the application form should be signed by the applicant
• All supporting documents should be attested by either Gazetted Officer / Bank Manager / Post Master
• For proof of attesting officer, either one of the below is mandatory –
• Contact Details of Attesting Officer including the name, designation, office address, and contact number. This should be part of the attestation. If provided separately, it should be attested either by the Applicant or Attesting Officer
• Self-Attested copy of the Organizational Identity card of the Attesting Officer
• Organizational Documents can also be attested by Authorized Signatory. However, if the taxpayer fails to get the Organizational Documents attested by the authorized signatory, an attested copy of the organizational ID card of the authorized signatory is mandatory.
How Digital Signature work
Like handwritten signatures, digital signatures are unique to each signer. The providers of digital signing solutions, such as DocuSign, follow a specific protocol called Public Key Infrastructure (PKI). PKI requires the provider to use a mathematical algorithm to generate two long numbers called keys. One key is public, and one key is private.
When someone electronically signs a document, the signature is created using the signer’s private key, which is always securely kept by the signer. The mathematical algorithm acts as a cypher, creating data matching the signed document, called a hash, and encrypting that data. The resulting encrypted data is the digital signature. The signature is also marked with the time that the document was signed. If the document changes after signing, the digital signature is invalidated.
For instance, suppose that Jane signs a timeshare sale agreement with her private key. The buyer receives the document. A copy of Jane's public key is also sent to the document's purchaser. If the signature is not Jane's or the document has changed since it was signed, the public key will be unable to decrypt it using the cypher that produced the keys. The signature is then invalid. To ensure the integrity of the signature, PKI mandates that keys be generated, carried out, and stored securely. As a result, a reliable Certificate Authority (CA) is typically required. Companies that provide digital signatures, like DocuSign, address the PKI criteria for secure digital signatures.
Importance of TAN :
Under the Income Tax Act 1961, TAN (Tax Deduction and Collection Account Number) is an important identification number for individuals and businesses. Any person or any company which deducts or collects tax at source is required to obtain a TAN. It helps them at the time of filing Tax Returns. If they fail to provide their TAN numbers in certain required documents then they will be charged with a heavy penalty that varies somewhere from Rs.5,000 to Rs.10,000. You are required to state your TAN number on the following documents –
• The statements or returns of TCS (Tax Collection at Source) or TDS (Tax Deduction at Source).
• The challans for the payment of TCS (Tax Collection at Source) or TDS (Tax Deduction at Source).
• The submission of the certificates of TCS or TDS.
If you are a business or an individual making payments that attract TDS (Tax Deducted at Source), it is mandatory to have a TAN. TAN helps the Income Tax Department to track TDS compliance by the deductor, and ensures that the correct amount of tax is being deducted and deposited with the government.
• Filing TDS/TCS Returns: TAN is also necessary for filing TDS/TCS returns with the government. The TDS/TCS returns contain information on the tax deducted or collected at source, and are used by the Income Tax Department to verify the tax payments made by the deductor/collector.
Also, at the time of submission and collection of different Income Tax related forms.
It is important to note that the requirements for obtaining a Tax Deduction and Collection Account Number (TAN) do not apply to individuals who are required to deduct tax as per Section 194-IA. This section pertains to the sale proceeds received by individuals in relation to land or buildings. Additionally, the Central Government may notify certain persons to whom the TAN requirements do not apply.
Structure of TAN :
The TAN is an alpha-numeric number containing 10 digits. It has a unique structure that is different for every TAN holder. An example of TAN is - D E L K 1 2 3 4 5 L
The unique structure of a TAN is explained below –
● The first 3 alphabets in a TAN are the city code of jurisdiction code, i.e., the place where that particular TAN will be valid.
● The 4th alphabet is the first letter of the name of the person or company to whom that particular TAN is issued.
● The next 5 numbers are the unique number generated by the system.
● The last 1 alphabet is again a system-generated unique alphabet.
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