Introduction

The Tax Deduction and Collection Account Number (TAN) is a unique 10-character alphanumeric code issued by the Income Tax Department of India to entities responsible for deducting or collecting tax at source under the Income Tax Act, 1961. It is a mandatory identifier for filing TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) returns, depositing tax to the government, and issuing relevant tax certificates. The process of TAN allocation is not uniform for all entities—it varies depending on the type and legal structure of the business. Whether the applicant is a sole proprietor, a partnership firm, a company, a trust, or a government organization, TAN is allotted in accordance with their operational, legal, and tax responsibilities. Understanding how TAN is allocated across different business structures is vital for ensuring proper compliance from the outset of business operations.

TAN Allocation for Sole Proprietorships

In the case of a sole proprietorship, the business is owned and operated by an individual, and there is no separate legal identity from the owner. However, if the proprietorship pays rent, contractor charges, professional fees, or salaries that fall under TDS regulations, it is required to apply for a TAN. The application is submitted under the name of the proprietorship business, but the owner’s Permanent Account Number (PAN) is used as the tax reference. TAN is allotted in the name of the business, and the individual becomes the responsible deductor.

TAN Allocation for Partnership Firms and LLPs

For partnership firms and Limited Liability Partnerships (LLPs), TAN is applied for in the name of the registered partnership entity. The firm has a distinct legal identity and its own PAN, which must be used in the TAN application. The managing partner or an authorized signatory is designated as the responsible person in the application form. Since these firms frequently engage contractors, professionals, and employees, TDS obligations are common, and TAN becomes an essential part of their statutory compliance framework.

TAN Allocation for Companies (Private and Public)

Private limited companies and public limited companies are incorporated under the Companies Act, and they possess a separate legal identity distinct from their shareholders and directors. These entities are legally obligated to deduct and deposit TDS on a wide range of transactions, including salaries, vendor payments, interest, and rent. The application for TAN is made using the company’s PAN, and the name and designation of an authorized official—usually a finance or compliance officer—is provided. Given their formal corporate structure and high volume of transactions, companies often require separate TANs for different branches or business units, especially if they deduct tax from multiple locations.

TAN Allocation for Trusts, NGOs, and Educational Institutions

Charitable trusts, religious organizations, non-governmental organizations (NGOs), and educational institutions often fall under special tax categories. While many such institutions enjoy exemptions under Sections 12A and 80G, they are still required to deduct TDS when making payments that attract tax under the Act. TAN in these cases is allotted using the PAN of the trust or society, and the name of the trustee or administrator is provided as the responsible person. This ensures that all deductions are tracked accurately, and tax credits can be passed on properly to deductees.

TAN Allocation for Government Departments and Local Authorities

Government departments, ministries, and local bodies such as municipalities and panchayats are also required to deduct tax at source when making payments to employees, contractors, or vendors. While these are non-commercial entities, they must apply for TAN in the name of the department or body using a government-assigned PAN. The responsible officer, often a designated drawing and disbursing officer (DDO), is mentioned in the TAN application. The Income Tax Department processes these applications in coordination with government treasury systems to ensure seamless compliance.

Conclusion

The allocation of TAN varies depending on the legal structure and operational nature of the business entity. From sole proprietors to multinational corporations, each structure must follow a prescribed process to obtain TAN based on its legal status and tax responsibilities. The allocation not only serves as a tool for deducting and reporting tax but also establishes a formal line of communication between the deductor and the Income Tax Department. A clear understanding of how TAN is allotted to different types of businesses helps ensure accurate reporting, better compliance, and reduced legal risks from the very beginning of the business’s fiscal lifecycle.

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