TAN refers to the Tax Deduction and Collection Account Number, a 10-digit alphanumeric number required to be obtained by all those responsible for deducting tax at source (TDS) or required to collect tax at source (TCS). It is compulsory to quote TAN in TDS/TCS return (including any e-TDS/TCS return), TDS/TCS payment challan, and TDS/TCS certificates. TAN is allotted by the Income Tax Department (ITD). To help improve the process of TAN application, the government of India has eased up the process where the applicants can apply online.
The provisions of deduction of tax at source are applicable to several payments such as salary, interest, commission, brokerage, professional fees, royalty, contract payments, etc. Therefore, in respect of payments to which the TDS provisions apply, the payer has to deduct tax at source on the payments made by him and he has to deposit the tax deducted by him to the credit of the Government.