TAN (Tax Deduction and Collection Account Number) is a 10-character alphanumeric number that the Income-tax Department issues to anyone who deducts TDS or collects TCS. You must apply once using Form 49B (online via the Protean/NSDL TIN portal or the Income-tax e-filing site), pay a fee of about Rs 77, and then quote your TAN on every TDS/TCS challan, return and certificate. Not having or not quoting TAN attracts a Rs 10,000 penalty under Section 272BB.
What a TAN Looks Like
A TAN is structured as four letters + five digits + one letter — for example DELM12345A. The first three letters denote the jurisdiction (city), the fourth letter is the initial of the deductor’s name, the five digits are a unique system-generated number, and the last letter is a check character.
| Part | Characters | What it means |
|---|---|---|
| Jurisdiction code | First 3 letters | City / RTO where TAN was issued (e.g. DEL) |
| Name initial | 4th letter | First letter of the deductor’s name |
| Unique number | 5 digits | System-generated sequence |
| Check letter | Last letter | Validation character |
Example: DELM12345A. TAN is quoted in all TDS/TCS returns, challans (ITNS 281) and certificates (Form 16 / 16A / 27D).
TAN is governed by Section 203A of the Income-tax Act, 1961 (renumbered under the Income-tax Act, 2025 effective AY 2026-27). The provision requiring every deductor/collector to obtain and quote TAN is unchanged — only the section numbering is being modernised.
Who Needs a TAN?
Any person responsible for deducting TDS or collecting TCS must hold a TAN. This covers a wide range of deductors:
- Employers deducting TDS on salary
- Businesses & professionals deducting TDS on rent, contractor payments, commission or professional fees
- Companies, firms, LLPs and trusts making any payment subject to TDS
- Individuals & HUFs liable to tax audit who deduct TDS on business payments
- Sellers collecting TCS on specified goods (e.g. scrap, motor vehicles above the threshold)
- Government offices and local authorities deducting or collecting tax
An individual or HUF not liable to tax audit who deducts TDS on rent under Section 194-IB (rent above Rs 50,000/month) or on property purchase under Section 194-IA can use PAN instead of TAN and pay via a challan-cum-statement (Form 26QC / 26QB). TAN is required only once you fall into the regular TDS net.
Not sure whether you need to deduct TDS and get a TAN?
Ask a TDS Expert →TAN vs PAN — What’s the Difference?
PAN and TAN are both 10-character numbers issued by the Income-tax Department, but they serve entirely different purposes. You cannot use one in place of the other for TDS returns.
PAN — identifies a taxpayer
- Permanent Account Number
- Used to file your own income-tax return
- Quoted on high-value transactions
- One PAN per person / entity
- Governed by Section 139A
TAN — identifies a deductor
- Tax Deduction & Collection Account Number
- Used to deposit and report TDS/TCS
- Quoted on challans, returns & TDS certificates
- One TAN per deductor (per office/branch if separate)
- Governed by Section 203A
| Feature | PAN | TAN |
|---|---|---|
| Full form | Permanent Account Number | Tax Deduction & Collection Account Number |
| Purpose | Identify the taxpayer | Identify the TDS/TCS deductor |
| Application form | Form 49A / 49AA | Form 49B |
| Used in | ITR, financial transactions | TDS/TCS challans, returns, certificates |
| Section | 139A | 203A |
A deductor uses PAN for its own income-tax return and TAN for all TDS/TCS compliance — both are mandatory for their respective functions.
How to Apply for TAN (Form 49B)
TAN is applied for once, using Form 49B, online through the Protean (formerly NSDL) TIN portal or the Income-tax e-filing site. No documents are attached — Form 49B is a self-declaration.
- Deductor name & complete address
- Category of deductor (company, firm, individual, govt.)
- PAN of the deductor (if available)
- Responsible person’s name & designation
- Contact number and email
- Payment method for the ~Rs 77 fee
- 14-digit acknowledgement noted for tracking
A deductor should hold only one TAN. Applying for or using more than one TAN is not permitted and can attract penalty. If a duplicate TAN was allotted, surrender it by filing the “Changes or Correction in TAN” request and retain a single active TAN.
Penalties for TAN Defaults
| Default | Penalty | Provision |
|---|---|---|
| Failing to apply for TAN | Rs 10,000 | Section 272BB |
| Not quoting TAN in challans / returns / certificates | Rs 10,000 | Section 272BB |
| Quoting an incorrect TAN | Rs 10,000 | Section 272BB |
Separate consequences apply for late TDS deduction, deposit or return filing (interest and late fees). TAN penalty is over and above those.
Getting a TAN does not complete your TDS compliance. You still have to deposit TDS via challan ITNS 281 by the monthly due date and file quarterly returns (24Q / 26Q / 27Q) with correct challan and PAN details — otherwise interest and late fees accrue.
Want us to obtain your TAN and run your quarterly TDS returns?
Get TDS Compliance Help →TAN Number — Frequently Asked Questions
Related TaxClue services
From TAN to TDS Returns — Handled End to End
Our CA-led team obtains your TAN, sets up your TDS workflow, deposits challans on time and files accurate quarterly returns with Form 16/16A — 100% online, across India.