Advantages of TAN
1. Legal Compliance: The TAN number, in and of itself, provides no benefits to the assessee other than the ability to escape the file by complying with a legal obligation. According to the provisions of the Income Tax Act of 1961, everybody responsible for deducting or collecting tax at source must get a TAN number. Failure to get a TAN number or offering an incorrect TAN number can lead to fines and legal consequences.
2. Tax Deduction and Collection: It is also known as TDCAN, and it sorts, identifies, and matches the number of TDS. TCS deducts, collects, and provide necessary credits to the individual whose income tax liability TDS/TCS deducts. The TAN number is used to identify the person or business that deducted or collected tax at the point of collection and deposited the money to the government’s account. The TAN number is also used for issuing TDS certificates to those from whom tax has deducted.
3. Tax Payments: TAN offers benefits to income tax authorities for tax collection at the moment when income becomes accrued.
4. Avoidance of Fraud: TAN number helps in the reduction of TDS deduction and collection fraud. It ensures that only authorised individuals or companies deduct and collect taxes.