Tax Account Number

Introduction

Under the Income-tax Act, every person making payment or crediting income of specified types to another person is required to deduct a specific proportion of amount payable/creditable at the time of making payment or giving credit, whichever is earlier and deposit the sum so deducted. Every such person shall have to apply to the Assessing Officer for allotment of a tax deduction account number (TAN) under section 203A of Income Tax Act 1961.

Mandatory nature of provisions

Under Income-Tax Law, it is mandatory to apply and obtain TAN if an organisation is liable to deduct tax at source on certain payments which are discussed in the following paras and the organisation deducting tax is required to quote the TAN in the following documents:

  • all challans while depositing the tax so deducted.
  • all certificates issued against the tax deducted.
  • in all TDS returns under section 200(3) and 206C(3)
  • all returns furnished in respect of tax deducted at source.
  • all other documents pertaining to such transaction as may be prescribed.

Procedure for obtaining tax deduction account number(TAN)

All organisations which are required to deduct tax at source are required to obtain TAN through online application in Form 49B or can also be obtained by offline filling 49B in duplicate and submitted to any TNC-FC. For online filing please follow below mentioned procedure:

  • Step – I: Visit https://tin.tin.nsdl.com/tan/index.html and select "Online Application for TAN (Form 49B)".
  • Step – II: Select Category of Deductors from the drop down menu and click on "Select Button";
  • Step – III: Fill out the requisite details on the form (Fill all mandatory fields (marked with *));
  • Step – IV: If the data submitted by applicant fails in any format level validation, a response indicating the error(s) will be displayed on the screen;
  • Step – V: Forms need to be re-submitted after rectifying the error(s);
  • Step – V: In case form level error(s) do not exists a confirmation screen with data filled by the applicant will be displayed.
  • Step – VI: In case applicant required any amendment to the data displayed in the confirmation screen, it may choose the edit option.
  • Step – VII: In case the displayed information is correct, applicant shall choose the confirm option.
  • Step – VIII: On successful payment of Fees (in case the mode of payment is other than DD or Cheque) an acknowledgment slip will be generated
  • Step – IX: Applicant shall save and print the acknowledgment and send it to NSDL alongwith requisite documents at
    NSDL e-Governance Infrastructure Limited,
    5th floor, Mantri Sterling,
    Plot No. 341, Survey No. 997/8,
    Model Colony,
    Near Deep Bungalow Chowk,Pune – 411016

The envelope should be superscribed as 'APPLICATION FOR TAN - Acknowledgment Number' (e.g. 'APPLICATION TAN - 88301020000244').

Documents required

No documents are required to be filed with the application for allotment of TAN. However, proof of identity, proof of address for the establishment and PAN is required.

Multiple TAN

It is illegal to possess or use more than one TAN. However, an entity can have different TAN for different branches/ divisions or location.

Payments requiring tax deduction at source

Section 200 of the Act specifies a list of payments which require deduction of tax at source. From the viewpoint of Voluntary Organisations, the following are the important payments, in respect of which tax must be deducted at source for the previous year 2019-2020.

For Salaried person
Tax Slabs Rate of Interest
Up to Rs. 2,50,000 Nil
Rs. 2,50,000 – Rs. 5,00,000 5%
Rs. 5,00,000 – Rs. 10,00,000 20%
Above 10,00,000 30%
 
Senior Citizen (Aged 60 years but less than 80 years)
Tax Slabs Rate of Interest
Up to Rs. 3,00,000 Nil
Rs. 3,00,000 to Rs 5,00,000 5%
Rs. 5,00,000 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%
 
For Senior Citizen (Aged 80 years and above)
Tax Slabs Rate of Interest
Up to Rs. 5,00,000 0%
Rs. 5,00,000 to Rs. 10,00,000 20%
Above Rs. 10,00,000 30%

Other important TDS rates are:

S.No Nature of payments Section Basic Cut off TDS rates for
Individual and HUF Other than Individual/ HUF If PAN is not submitted/ Invalid PAN
1 Payment to Contractors ,Advertisement /Sub Contractor , Payment to Transporter 194C 30,000.00 (Single bill) or 100,000.00 aggregate bills during the year. 1% 2% 20%
2 Insurance Commission 194D 15,000 5% 10% 20%
3 Commission/Brokerage 194H 15,0000 5% 5% 20%
4 Rent-property 194I 240,000 10% 10% 20%
5 Rent-Plant / Machinery 194I 240,000 2% 2% 20%
6 Professional Fees 194J 30,000 10% 10% 20%

Deposit of tax deducted at source

The tax deducted at source is required to be deposited to the credit of the Central Government within the stipulated time limit. Whenever TDS is, deposited assesse should quote TAN. Such deposit can be made by following modes:

1) Electronic mode (mandatory for):

2) Physical Mode: By furnishing the Challan 281 in the authorized bank branch.

The time limit for depositing the amount of TDS is as under:

(i) for salaries-by 7th of next month except for the month of March where the due date is 30th of April.

(ii) For other payments- by 7th of next month except for the month of March where the due date is 30th of April.

Issue of certificate

Under section 203, the organisation deducting TDS is required to issue a certificate to the person from whose income, tax has been deducted. This certificate will enable the person to claim credit for such tax deducted in his/her return of income. Organisations can prepare the certificate in their own stationery but in the prescribed form. The prescribed form is Form No.16 for deduction of tax from salary, for all other cases it is Form No. 16A. Form 12BA is a statement showing particulars of perquisites, other fringe benefits or amenities and profits in lieu of salary with value thereof.

Interest, penalties & punishment

Failure to deduct income-tax at source on various payments as discussed may attract interest, penalty and even severe punishment.

If an organisation does not deduct tax the tax then interest @ 1% per month would be levied on the tax not deducted from the date on which such tax was deductible to the date on which such tax is deducted, under section 201(1A).

If an organisation does not paid the amount deducted then interest @ 1.5% for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid 201(1A).

The Income Tax Department may also levy penalties to the extent of the amount of tax not deducted in cases of failure to deduct tax, under section 271C.

If the tax is deducted but not deposited in favour of the Central Government as per the provisions of the Income-Tax Act, then the principal officer can be punished with imprisonment for a period of 3 month to 7 years with fine.

where a person defaults in furnishing TDS return as prescribed under section 200, than he shall be liable to pay, by way of fee, a Rs. 200 for every day during which the failure continues.

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