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What is TAN CARD

A TAN (Tax Deduction and Collection Account Number) card is issued by the Income Tax Department of India to individuals or entities who are responsible for deducting or collecting taxes on payments they make. The TAN is a 10-digit alphanumeric code, and it’s essential for entities like businesses, employers, and other institutions involved in payments that attract Tax Deducted at Source (TDS) or Tax Collected at Source (TCS).

Benefits of TAN CARD

Compliance with Tax Laws
TAN ensures legal compliance with the tax laws in India. It’s mandatory for entities that deduct or collect tax at source to have a TAN, and using it helps avoid penalties or fines for non-compliance.
Streamlined Tax Deduction and Collection
TAN helps streamline the process of Tax Deducted at Source (TDS) and Tax Collected at Source (TCS), making it easier for businesses to manage their tax obligations systematically and accurately.
Facilitates Filing of TDS/TCS Returns
TAN is required to file TDS and TCS returns. Without it, entities cannot file these returns, which are essential for reporting tax deductions and collections made by the business.
Avoidance of Penalties
Failure to quote TAN on TDS/TCS returns and payments can lead to heavy penalties. TAN ensures that you avoid penalties associated with non-quotation or incorrect filing.
Ease of Tracking and Crediting of Taxes
TAN helps the Income Tax Department track tax deductions and collections more effectively, ensuring that credits are given correctly to both the taxpayer and the deductor. This helps avoid disputes over tax payments.
Essential for Contractual and Salary Payments
Employers and businesses often need TAN for deductions on salary payments and payments to contractors. Having a TAN allows smooth processing and compliance when making these payments.
Required for TDS Certificates and Other Official Documents
TAN is necessary to generate TDS certificates, which are provided to individuals whose taxes are deducted at the source. This ensures transparency and proper record-keeping for tax purposes.
Builds Credibility with Partners and Clients
Possessing a TAN indicates that a business is registered and compliant with tax regulations, enhancing credibility and trustworthiness among partners, clients, and employees.