Every business that pays a salary, a rent, a professional fee or a contractor bill above a threshold has to deduct tax at source and hand it to the government. The number that identifies it when it does so is the TAN, the Tax Deduction and Collection Account Number. It is not a PAN, it is not a GSTIN, and confusing it with either is the most common reason first-time employers find they cannot deposit the tax they have already deducted.
This guide sets out what the number is, who must have one and who is specifically excused, how a new company gets it without applying, how everyone else applies, what it costs, and what section 272BB charges for getting it wrong. Everything is as of September 2026.
What a TAN is
Section 203A of the Income-tax Act requires every person deducting tax at source (TDS) or collecting it (TCS) to apply for a TAN and to quote it on the tax challan, the TDS and TCS returns, the certificates issued to payees and every other document the rules prescribe. A TAN is allotted by the Income Tax Department and is valid for the life of the deductor.
The number has ten characters in a fixed pattern:
| Position | Characters | Meaning |
|---|---|---|
| 1–3 | Letters | Code of the jurisdiction where the TAN was allotted (for example BLR for Bengaluru, MUM for Mumbai, DEL for Delhi) |
| 4 | Letter | First letter of the deductor’s name |
| 5–9 | Digits | Sequence number |
| 10 | Letter | Check character |
So a Bengaluru company called Northstar Analytics Private Limited would hold a TAN of the form BLRN12345F. The first three letters tell you which assessing officer the deductor sits under, which matters when the office moves city: the TAN stays the same, but the jurisdiction on record has to be updated.
TAN, PAN and GSTIN: which does what
| Number | Issued by | Used for | Who needs it |
|---|---|---|---|
| PAN | Income Tax Department | Paying your own income tax, filing your return, being identified as a taxpayer | Every taxpayer |
| TAN | Income Tax Department | Deducting or collecting tax on payments to others and remitting it | Every deductor or collector (s.203A) |
| GSTIN | GST Network, on the state’s or Centre’s approval | Charging and paying GST on supplies | Every person registered under GST |
A company will normally hold all three. A freelancer with no employees and no large payments to contractors will hold a PAN and, above the turnover threshold, a GSTIN, but no TAN.
Who must have a TAN
The obligation follows the payment. If any provision of Chapter XVII-B of the Act requires you to deduct tax on a payment, you need a TAN to remit it. In practice that means:
- Every company and LLP, from the first salary, rent or professional fee it pays above the threshold. Companies and LLPs must deduct regardless of their own turnover.
- Partnership firms, proprietors and HUFs whose accounts are audited under section 44AB, when they pay rent, contractors, professionals, commission or interest above the thresholds.
- Any employer paying a salary on which tax is deductible under section 192, whatever its constitution.
- Government offices, trusts, societies, banks and branches that deduct or collect tax.
- Sellers required to collect tax at source (TCS) under section 206C, such as on scrap, timber, motor vehicles above ₹10 lakh and, for e-commerce operators, under section 194-O.
Who is excused: the PAN-based deductions
Three sections let individuals and HUFs deduct tax without a TAN, using their PAN instead, because Parliament did not want a home-buyer or a tenant to become a registered deductor for one transaction:
| Section | Payment | Threshold | Rate | Form |
|---|---|---|---|---|
| 194-IA | Purchase of immovable property (other than agricultural land) | Consideration of ₹50 lakh or more | 1% | 26QB; certificate in Form 16B |
| 194-IB | Rent paid by an individual or HUF not liable to tax audit | More than ₹50,000 a month | 2% (5% before 1 October 2024) | 26QC; certificate in Form 16C |
| 194M | Contractor, commission or professional fees paid by an individual or HUF not liable to deduct under 194C, 194H or 194J | More than ₹50 lakh in a year | 2% (5% before 1 October 2024) | 26QD; certificate in Form 16D |
These are challan-cum-statements: the tax is deposited and the return filed in one form, within 30 days of the end of the month of deduction. Everyone outside these three situations who has to deduct needs a TAN.
A new company already has one
Since the introduction of SPICe+ and the linked AGILE-PRO-S form, a company incorporated through the MCA portal is allotted its PAN and TAN as part of incorporation; both numbers appear on the certificate of incorporation. An LLP incorporated through FiLLiP is treated the same way. There is nothing to apply for, no fee to pay, and the TAN is live from the day of incorporation. What the company does have to do is register the TAN on the TRACES portal (tdscpc.gov.in) before it can download Form 16 and Form 16A for its payees, and register as a deductor on the e-filing portal to file returns.
How everyone else applies: Form 49B
A partnership firm, a proprietor who has crossed into audit, a trust, a society, or a company formed before the SPICe+ era that somehow never obtained one, applies in Form 49B. The route is:
- Fill Form 49B online on the Protean TIN portal (the service formerly branded NSDL e-Gov). It asks for the category of deductor, the name exactly as on PAN, the address, the assessing officer code for that address (the portal has a lookup), and the details of the person signing.
- Pay the fee: ₹65 plus GST, ₹77 in total as of September 2026, by card, net banking or demand draft.
- Sign the acknowledgement. With a digital signature or Aadhaar e-sign the application is complete online. Without one, print the acknowledgement, sign it and post it to Protean’s Pune address within 15 days; the ARN-style acknowledgement number lets you track it meanwhile.
- Receive the TAN by email, usually within one to two weeks, followed by an allotment letter by post.
The form has no document upload; no proof of address or identity is attached. What the department checks is that the name and category match the PAN, so fill the name exactly as the PAN card shows it.
What the TAN is quoted on
- Challan ITNS 281, used to deposit deducted and collected tax by the 7th of the following month (30 April for March deductions by non-government deductors).
- Quarterly statements: 24Q for salary, 26Q for other resident payments, 27Q for payments to non-residents, 27EQ for TCS. Due on 31 July, 31 October, 31 January and 31 May for the four quarters.
- Certificates to the payee: Form 16 for salary (annually, by 15 June) and Form 16A for everything else (quarterly).
- Lower-deduction certificates (Form 13) applied for by payees quote the deductor’s TAN.
Penalties and the real cost of not having one
Section 272BB provides a penalty of ₹10,000 for failing to apply for a TAN when required, and a further ₹10,000 for quoting a wrong or false TAN. That figure is the smaller problem. Without a TAN the challan cannot be deposited and the quarterly statement cannot be filed, so the tax you deducted sits with you while interest under section 201(1A) runs at 1.5% a month from deduction to deposit, late-filing fees under section 234E accrue at ₹200 a day, and your payees cannot see the credit in their Form 26AS. Apply before the first payment on which you have to deduct, not after.
Finding, correcting and surrendering a TAN
If you have lost the number, Know Your TAN on the Income Tax e-filing portal (incometax.gov.in) returns it from the deductor’s name and state. Changes to the name, address or jurisdiction are made through the Form for Changes or Correction in TAN data on the Protean portal, for the same fee as a fresh application. A duplicate TAN, or one no longer needed because the entity has closed or merged, is surrendered through the same form; do not simply stop using it, because returns not filed against a live TAN attract notices.
The order to do things in, for a new business
Company or LLP: incorporate, and the TAN arrives with the certificate. Register it on TRACES and on the e-filing portal in the first month, before the first salary is paid. Partnership firm or proprietorship: watch the two triggers, employees on the payroll and turnover crossing the audit limit, and apply in Form 49B the month either happens. In every case, set the 7th-of-the-month deposit date and the quarterly return dates in the calendar the day the TAN arrives, because the number itself is the easy part.
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