TAN number is a specific number allotted for Deduction/ Collection of TDS and payment of same into Govt A/c by a person, who is making payment in relation to a business purpose/ transaction. The TAN No provides a unique Identification to Tax Deductor / Collector and help in the tracking of transactions, like payment of taxes and return filing.
As per Mandate from Income Tax department, every business entity needs to deduct TDS (Tax Deduction at Sources), while making payment for certain business transactions, such as payment to Contractors/Sub-Contractor, or Professional for their services. After such deduction, such payment needs to be deposit in Govt. A/c through online banking or through challan to be deposited in specified Banks and, after that, a return also needs to be filed in this regards.
Simply TAN no is a must before anyone can proceed for a Tax deduction or payment.
No, Only those business which needs to deduct TDS or Collect TDS need to apply for TAN No.
Taking TAN No is not a legal mistake, however, once you have taken the TAN no, you need to mandatorily file a quarterly return, even no tax has been collected by you. Hence it adds an additional compliance cost without any benefit. In fact, if you forget to file the return, you will end up paying 100 Rs late filing fee per day till the date of submission of returns.
It has been seen that much online company formation consulting firm offer free TAN No, without understanding the actual need of a client. That practice actually put an additional compliance burden on the client.
After taking TAN No every firm need to comply with 2 compliances:-
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