What is TAN?

Also called: Tax Deduction and Collection Account Number

A TAN is the ten-character number that anyone who deducts tax at source must quote on every TDS return, challan and certificate they issue.

TAN is separate from PAN and serves a different purpose: PAN identifies you as a taxpayer, TAN identifies you as a deductor. Any business paying salaries above the threshold, rent above ₹2,40,000 a year, or professional fees above ₹30,000 needs one.

Applications go on Form 49B. Failing to obtain a TAN when required, or quoting a wrong one, attracts a ₹10,000 penalty under section 272BB.

Why it matters

You cannot file a TDS return without a TAN, and you cannot issue Form 16 to your employees without filing that return.

A worked example

A small company pays ₹60,000 a month in office rent to an individual landlord and deducts TDS under section 194-I, but never applied for a TAN.

Illustrative figures. Your own numbers will differ — that is what the quote is for.
Annual rent	₹7,20,000
Section 194-I threshold for rent	₹2,40,000 a year
TDS at 10% on rent for land or building	₹72,000
Penalty for not obtaining a TAN	₹10,000
Interest for late deduction, 1% per month	runs from the date deduction was due
Disallowance in the company's own return	30% of ₹7,20,000 = ₹2,16,000

The disallowance is the expensive part. Rent that could not be deducted because TDS was not deducted raises the company's taxable profit by ₹2,16,000, which costs far more than the TDS itself would have.

The statutory position

Each figure with the provision it comes from, so it can be checked.
What	Position	Source
Application form	Form 49B	Rule 114A, Income-tax Rules 1962
Penalty for failure to obtain or for quoting a wrong TAN	₹10,000	Section 272BB, Income-tax Act 1961
Rent threshold triggering TDS	₹2,40,000 a year	Section 194-I, Income-tax Act 1961
Professional fees threshold	₹30,000 a year	Section 194J, Income-tax Act 1961
Disallowance where TDS is not deducted	30% of the expense	Section 40(a)(ia), Income-tax Act 1961

Not to be confused with

These get used interchangeably, including by tools that should know better. They are different things.

PAN

PAN is your identity as a taxpayer; TAN is your identity as a deductor. A TDS challan quoting a PAN where a TAN belongs cannot be consumed by the return.

TDS return

TAN is the registration. The TDS return is the quarterly statement filed under it. Having a TAN and never filing is a common and expensive combination.

Questions people ask

Do I need a TAN if I buy a property?

No. TDS on a property purchase above ₹50 lakh under section 194-IA is paid on Form 26QB using the buyer's PAN, precisely so that an individual buyer does not have to obtain a TAN for a one-off transaction.

Does an individual paying rent need one?

Not under section 194-IB, which covers individuals and HUFs paying rent above ₹50,000 a month and is filed on Form 26QC against PAN. A business paying rent falls under section 194-I and does need a TAN.

Can one TAN cover several branches?

It can, but separate TANs per branch are permitted and are often cleaner where each branch deducts and deposits independently. What matters is that the TAN quoted on the challan matches the TAN on the return.

What usually goes wrong

Deducting tax correctly and depositing it against the PAN instead of the TAN, which strands the payment
Obtaining a TAN and then not filing quarterly returns, so employees have no Form 16 and no credit
Continuing to use a TAN after the entity has changed constitution, which the department treats as a different deductor
Quoting a wrong TAN on a challan, which costs ₹10,000 under section 272BB and a correction request