Applying for TAN for a Business
Chapter Eleven
Syllabus topic 3, "PAN & TAN application for business Under The Income Tax Act, 1961."
Pages 22 to 23 of 80
The form
Form 49B, headed Form of application for allotment of tax deduction and collection account number. One form, whatever the status of the applicant.
Where the application goes
The same two agencies that take PAN applications: Protean eGov Technologies and UTIITSL, online or at a counter. The application may also be made through the TIN facilitation centres.
Unlike PAN, there is no instant e-TAN. The application is processed and the number is allotted in a few working days.
The steps
- Fill Form 49B. The category of deductor is the first choice: individual, firm, company, association of persons, branch of a firm, and so on.
- Give the details of the person responsible for deduction. This is a named individual, with his own designation and PAN. For a firm it is normally a partner.
- Give the firm's address and its PAN.
- Pay the fee, which is small.
- Submit online, and print the acknowledgement.
- Sign the acknowledgement and send it to the agency within the time stated on it, or complete the application with a digital signature.
- Track by the fourteen-digit acknowledgement number.
- Receive the TAN by post and by email.
What Form 49B asks that Form 49A does not
Three things, and they show what the number is for.
The category of deductor, which decides the format of the returns that will be filed.
The person responsible for deduction, by name, designation and PAN. TAN is allotted to the entity; the responsibility is fixed on a named person, and that person's PAN goes on the form.
The address at which the deduction is made, which may be a branch. A firm may hold a separate TAN for each branch that deducts.
The documents
None. Form 49B requires no documentary proof at all: it is a declaration, and the agency forwards it.
That is the sharpest practical difference from a PAN application, which requires identity, address and, for an individual, date of birth. A candidate asked to compare the two applications should lead with it.
What has to be done once it is allotted
| Duty | When |
|---|---|
| Quote the TAN on every TDS or TCS challan | On every payment of the tax deducted |
| Quote it on every quarterly statement of tax deducted | Every quarter |
| Quote it on every certificate issued to a deductee, such as Form 16 and Form 16A | On issue |
| Quote it in all documents pertaining to the transactions, as prescribed | Always |
Section 397(1)(b) is the authority for all four.
A worked case
Shirke and Deshpande, a partnership firm, is formed on 5 April 2027. It has no employees. On 1 July 2027 it hires a manager on a salary of Rs. 45,000 a month, and it begins paying rent of Rs. 60,000 a month for its office.
Applying for TAN for a Business
Does it need a TAN, and from when?
The manager's annual salary is Rs. 5,40,000, above the amount not chargeable to tax, so the firm must deduct tax from his salary. It is also paying rent above the threshold at which tax must be deducted from rent.
So the firm becomes a person deducting tax in July 2027, and section 397(1)(a) requires it to apply for a TAN, having not been allotted one. It should apply before the first deduction, because the challan by which it pays the tax over cannot be filled without the number.
It cannot use its PAN instead. None of the four exceptions in section 397(1)(c) applies: the firm is not an individual or a Hindu undivided family, and none of the named table entries covers salary or rent paid by a firm.
And it must obtain the manager's PAN, because section 397(2) makes the deduction fall at a higher rate if the deductee does not furnish one.
The order in which a new firm does this
PAN first, always. Form 49B asks for the firm's PAN and for the PAN of the person responsible, so a firm without a PAN cannot complete a TAN application.
TAN only when it is needed. A firm that has no employees and makes no payment attracting deduction does not apply for one, and does not have to.
The chapter at the end of Module II puts all eight registrations in the order the dependencies force, and this is one of the dependencies.
The rest of this subject
These notes are cut from the University's printed syllabus. Open the syllabus itself, or the past papers, for the same subject.