Quick answerA Tax Deduction and Collection Account Number (TAN) is a ten-character alphanumeric number that every person required to deduct or collect tax at source must obtain, under Section 203A of the Income-tax Act, 1961 and the corresponding provisions of the Income-tax Act, 2025. It is applied for online in Form 49B through Protean (formerly NSDL e-Gov), or through SPICe+ for new companies. Failing to obtain or quote TAN attracts a penalty of ₹10,000.
- Law
- Section 203A (1961 Act) and corresponding new Act provisions
- Application
- Form 49B via Protean
- Penalty
- ₹10,000 for not obtaining or quoting
- Validity
- Lifetime, no renewal
Who needs a TAN
You need a TAN if you are required to deduct tax at source (TDS) or collect tax at source (TCS) on any payment. In practice this covers:
- Companies, LLPs, firms, trusts and societies paying salary, rent, contractors, professionals, commission or interest above the thresholds.
- Proprietors and professionals whose business turnover exceeded ₹1 crore, or professional receipts exceeded ₹50 lakh, in the previous year, which brings them within the main TDS sections.
- Government offices and local authorities.
- Sellers liable to collect TCS on specified goods.
There is an important exception. An individual or HUF who is not otherwise a deductor and deducts tax only on the purchase of immovable property (Section 194-IA), on rent above the threshold (Section 194-IB), or on payments to contractors and professionals under Section 194M, does not need a TAN. They pay through a PAN-based challan-cum-statement (Forms 26QB, 26QC or 26QD) and issue the corresponding certificate.
How to apply for TAN
- Form 49B online: filed on the Protean TIN portal with the deductor's name, category (company, firm, individual and so on), address, PAN and contact details. A small processing fee is paid online.
- Acknowledgement: a 14-digit acknowledgement number is generated. If the application is signed with a digital signature, nothing more is needed; otherwise the signed acknowledgement is sent to Protean.
- Allotment: the Income Tax Department allots the TAN, usually within a few working days, and it is communicated by email and letter.
New companies and LLPs get TAN automatically through the SPICe+ and FiLLiP incorporation forms. A business with several branches may obtain a separate TAN for each branch that deducts tax independently, but must not hold two TANs for the same deducting unit. If you have lost your TAN, it can be searched on the e-filing portal rather than applied for again.
The TAN is then registered on the income tax e-filing portal and on TRACES, the TDS reconciliation system, which you will need for certificates and corrections.
After TAN: the monthly and quarterly TDS cycle
Obtaining a TAN is a one-time step. The real work is the cycle that follows:
| Step | Time limit |
|---|
| Deduct tax | At the time of payment or credit, whichever is earlier |
| Deposit TDS by challan ITNS 281 | By the 7th of the next month; for March, by 30 April |
| File quarterly TDS return | 31 July, 31 October, 31 January and 31 May for the four quarters |
| Issue Form 16A (non-salary) | Within 15 days of the due date of the quarterly return |
| Issue Form 16 (salary) | By 15 June after the year ends |
The returns are filed in different forms depending on the payee:
- Form 24Q: TDS on salaries, with annual salary details in the last quarter.
- Form 26Q: TDS on other payments to residents: contractors, professional fees, rent, commission, interest.
- Form 27Q: TDS on payments to non-residents.
- Form 27EQ: TCS collected.
For tax years from 2026-27 under the Income-tax Act, 2025, the rules framed under the new Act renumber several forms. The obligations remain the same, and we file in whichever form the portal prescribes for each period.
Common TDS sections a business deals with
Most small and mid-sized businesses deduct under a handful of sections. Rates and thresholds below apply for FY 2025-26 under the 1961 Act, after the threshold increases made by the Finance Act 2025:
| Payment | Section | Rate | Threshold |
|---|
| Salary | 192 | Average slab rate of the employee | Taxable salary above the exemption limit |
| Contractors and sub-contractors | 194C | 1% (individuals and HUFs), 2% (others) | ₹30,000 single payment or ₹1 lakh in a year |
| Professional fees | 194J | 10% (2% for technical services) | ₹50,000 in a year |
| Rent of land, building or furniture | 194-I | 10% (2% for plant and machinery) | ₹50,000 a month |
| Commission or brokerage | 194H | 2% | ₹20,000 in a year |
Payments to a partner by a firm, interest, purchase of goods by large buyers and payments to non-residents have their own sections. We give you a chart tailored to the payments you actually make, and update it when rates change.
Penalties and interest for TDS defaults
| Default | Consequence |
|---|
| Not obtaining or not quoting TAN | Penalty of ₹10,000 under Section 272BB |
| Not deducting TDS | Interest at 1% a month, and 30% of the expense disallowed (100% for payments to non-residents) |
| Deducting but depositing late | Interest at 1.5% a month from the date of deduction |
| Late TDS return | Late fee of ₹200 a day under Section 234E, up to the TDS amount |
| Return not filed for over a year, or incorrect | Penalty of ₹10,000 to ₹1 lakh under Section 271H |
A deductor who fails to deduct is also treated as an "assessee in default" for the tax itself. The cost of disallowance usually exceeds the interest, which is why TDS is the first thing we check in a business tax filing review.
Corrections, defaults and TRACES
After each return is processed, TRACES issues a statement showing defaults: short deduction, short payment, late filing fee, interest, or a PAN that does not match. These must be cleared by filing a correction statement and paying any demand. Common causes are wrong PANs, challans tagged to the wrong quarter or section, and the higher rate under Section 206AA missed where the payee has no PAN or an inoperative PAN (for example, one not linked with Aadhaar).
Correction statements are also how a payee's missing credit is fixed. When a contractor or employee complains that their Form 26AS does not show the tax you deducted, the answer is almost always a correction on TRACES. Outstanding TRACES demands also show up when you or your payees file their income tax returns.
How we handle TAN and TDS
For a new business we obtain the TAN, register it on the e-filing portal and TRACES, and give you a one-page chart of which payments need TDS, at what rate and above what threshold. Thereafter we compute the TDS each month from your payment data, prepare the challans, file the quarterly returns, issue Form 16 and 16A, and clear TRACES defaults. Fees for TAN are a small fixed amount; TDS compliance is a quarterly fee based on the number of deductees and challans. Where a TDS notice or demand is disputed, our income tax team takes over.
Documents you need
For a TAN application, and to start TDS compliance:
- PAN of the deductor (business, firm, LLP or company)
- Certificate of incorporation, partnership deed or registration certificate
- Address proof of the business premises
- Name, designation and PAN of the person responsible for deduction
- Contact mobile number and email
- Digital signature, if the application is to be signed electronically
- List of payees with PANs and payment details, for the first TDS return
How we handle it for you
Confirm need
We check whether you need a TAN or can use the PAN-based challan route.
File Form 49B
The application is filed online and the acknowledgement processed.
Register on portals
TAN is registered on the e-filing portal and TRACES.
Set up the cycle
You receive a TDS rate chart and monthly deposit calendar.
File returns
Quarterly 24Q, 26Q or 27Q returns are filed and certificates issued.
Why clients choose ProudLegal
Advocates who appear in courtYour matter is drafted and argued by enrolled advocates, not call-centre staff.
Company and tax filings in-houseCompany secretaries and tax professionals handle registrations and returns.
Fees agreed in writingYou receive a written fee quote before any work begins.
Updates on WhatsApp and emailEvery hearing date, filing and document is shared as it happens.
Please note: this page explains the law and procedure in general terms as on 30 October 2026. Fees, limits and timelines change, and the facts of each case matter, so take advice on your own papers before acting.
Frequently asked questions
What is TAN and who needs it?
TAN is the Tax Deduction and Collection Account Number. Every person required to deduct or collect tax at source must obtain it and quote it on challans, returns and certificates.
How do I apply for TAN online?
File Form 49B on the Protean (formerly NSDL) TIN portal, pay the processing fee, and send the signed acknowledgement unless the form is digitally signed.
What is the penalty for not having TAN?
A penalty of ₹10,000 under Section 272BB of the 1961 Act for failing to apply for or quote TAN.
Do I need TAN to deduct TDS on property purchase?
No. A buyer deducting TDS under Section 194-IA uses the PAN-based Form 26QB and does not need TAN, unless already a deductor for other payments.
How long does TAN allotment take?
Usually a few working days after the application and acknowledgement are processed.
What are the due dates for TDS returns?
31 July, 31 October and 31 January for the first three quarters, and 31 May for the last quarter.
Is TAN the same as PAN?
No. PAN identifies a taxpayer; TAN identifies a deductor for TDS and TCS. A business usually needs both.
Does TAN expire?
No. TAN is valid for life. Changes in name or address are made through a separate correction form.
