We have all heard about the TDS deduction, which is typically taken out of our salaries or the interest on fixed deposits. TDS is merely one more method of collecting income tax. Tax Deducted at Source is the name given to this tax since it is different in that it is collected at the place where income is earned. A similar method of collecting income tax is the Tax Collected at Source (TCS) system used by the income tax division.
TDS is the sum that the business withholds before making a payment and treats as a cost. For payments made in the form of interest, wages, rent, professional fees, etc.
TCS, on the other hand, refers to the money that is taken in when certain things are sold and are recognized as income by the business by the tax agency. TCS is gathered for a variety of things, including the sale of lumber, mines, quarries, and toll booths.
Section 203A of the Income Tax Act of 1961 mandates that individuals and corporations obtain TANs for TCS and TDS purposes. The tax deduction and collection account number, or TAN as it is more popularly called, is primarily used in connection with the deduction or collection of tax at source. The payee is given a TAN, which is crucial for making quarterly TDS returns.
What is TAN?
According to the Income Tax Act of 1961, anybody who must deduct TDS and collect TCS is given a tax deduction and collection account number or TAN. Ten alphanumeric digits make up a TAN number. The first four characters are alphabets, five are numbers and the final character is another alphabet.
Any papers related to TDS must have this number (Tax Deducted at Source). On TDS challans and certifications, TAN is listed. We cannot claim TDS in our returns if the TAN has not been cited. An individual may use the same TAN for both TDS and TCS. NSDL-TIN is the organization in charge of TAN issuance.
Documents Required for TAN Application –
When TAN is applied for by an individual online, no additional documentation is needed. They only need to submit the application form and the required application cost. After the application has been submitted, if any documentation is required, it can be given as needed.
The submission of KYC documents is necessary when applications are done offline. These documents include:
For individuals:
- Passport size photo
- Aadhar card
For partnership firms:
- Passport size photo – Authorized partner
- ID proof – All partners
- Address proof – Business location
- Partnership Deed
- Bank Account Statement of the firm