Income Tax Glossary

TAN (Tax Deduction and Collection Account Number)

TAN is a 10-digit alphanumeric number issued by the Income Tax Department. It is mandatory for every person or entity who is required to deduct or collect tax at source under the Income Tax Act.

### Who needs TAN?
- Employers deducting TDS from salaries (e.g., Pvt Ltd companies, schools, NGOs).
- Banks deducting TDS on interest paid to customers.
- Businesses deducting TDS on contractor payments, professional fees, rent, etc.
- E-commerce platforms deducting TDS on seller payments (as per Section 194-O).
- Buyers of immovable property deducting TDS under Section 194-IA.
- Tenants paying rent above ₹50,000/month (TAN not needed in this case, PAN is enough).

### Example:
- ABC Pvt Ltd pays ₹1,00,000 to a consultant. TDS of 10% = ₹10,000 is deducted. ABC must have a TAN to deposit this TDS and file returns.
- A company paying ₹2,00,000 rent/month must deduct 10% TDS. It needs TAN to comply with TDS rules.

### Format:
- TAN is in the format: ABCD12345E
- First 4 characters: Alphabetical (region code + status)
- Next 5 digits: Numeric
- Last character: Alphabetical

### Important:
- TAN is different from PAN.
- Apply for TAN online at: [https://tin.tin.nsdl.com/tan](https://tin.tin.nsdl.com/tan)

Non-compliance or failure to obtain TAN when required can attract a penalty of ₹10,000 under Section 272BB.

Disclaimer: We have taken great care and conducted research to prepare this glossary with the aim of helping users better understand various income tax terms. However, tax laws and interpretations may change over time. This content is for general informational purposes only and should not be treated as legal or professional advice. For specific queries, please consult a qualified tax expert or refer to official government resources.

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