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Tax Account Number is commonly referred as Tax Deduction Account Number or Tax Collection Account Number, or simply TAN. TAN registration leads to a generation of 10 digits alpha-numeric code that is issued by the Income Tax Department of India. As the name suggests, it is obtained by the person responsible for deduction or collection of tax at source (TDS or TCS). Businesses while deducting the salaries of employees must obtain and mention the number. Specified criteria to collect and deduct tax at source are already prescribed by the Government. Also, it is compulsory to quote TAN of the assessee in TDS/ TCS statements and challan for payment of TDS/ TCS.
The government has specified certain transactions including salary where the assessee needs to collect or deduct the tax from the source itself. While entering into such transactions, Tax Account Number is mandatory to be mentioned.
Every person deducting TDS at source must issue a certificate to the effect that the tax has been deducted with other required particulars. The certificate of TDS must quote the TAN of the deductors. Also, while filing TDS returns online, providing TAN is mandatory.