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.