TDS on Domestic Transactions

• Export businesses may not deduct TDS on income earned from exports as it is generally exempt under certain sections.
  
• However, they are still liable to deduct TDS on domestic payments such as:
  
  • Rent for office premises
    
  • Contractor and consultant payments
    
  • Professional fees and commissions
    
• For such payments, TAN is mandatory under Section 203A of the Income Tax Act.
  

Payments to Indian Service Providers

• Export businesses often engage Indian vendors and professionals (e.g., packaging agents, freight forwarders, digital marketers).
  
• When payments to these providers cross the TDS threshold, the business must deduct TDS and quote its TAN in returns and certificates.
  
• TAN is required to deposit the deducted amount and issue Form 16A to the recipients.
  

No TAN for Export Revenue Receipt

• Revenue received from foreign buyers for exported goods or services does not require TDS deduction, so TAN is not required for such inward receipts.
  
• TAN obligations are limited to payments made within India that are covered under TDS provisions.
  

Use of TAN in TDS Returns and Refund Claims

• Exporters with TAN must file quarterly TDS returns (Form 26Q, etc.) for all applicable deductions.
  
• If excess TDS is deducted and refund is due, proper TAN usage ensures that tax credits are traceable and reconciled with vendor accounts.
  
• TRACES and Form 26AS reflect these deductions only if TAN is used correctly.
  

Audits and Compliance Reporting

• TAN of the exporter must be reported in Form 3CD during a tax audit under Clause 34.
  
• The auditor checks whether the export business has fulfilled its TDS obligations using the correct TAN.
  
• Failure to obtain or quote TAN correctly in these cases leads to penalties under Section 272BB.