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ITR

Running a business without TAN and TDS defaults

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  1. Facts

    Anyone required to deduct TDS must hold a TAN and quote it. Not applying for TAN can attract a ₹10,000 penalty under Sec 272BB (now Sec 468), besides interest and default for the TDS itself.

  2. Provisions and law

    • Sec 272BB, Income-tax Act 1961 (now Sec 468, Income-tax Act 2025)Penalty of ₹10,000 for not applying for or not quoting TAN
    • Sec 201, Income-tax Act 1961 (now Sec 398, Income-tax Act 2025)A deductor who fails to deduct or pay TDS is treated as an assessee in default
    • Sec 194C, Income-tax Act 1961 (now Sec 393(1) Table Sl. No. 6(i), Income-tax Act 2025)TDS on payments to contractors

  3. Analysis

    Individuals buying property or paying high rent use PAN-based Forms 26QB or 26QC and do not need TAN. Regular deductors such as businesses under audit do. Example: a shop owner under audit paid ₹1,50,000 to a contractor without TDS; get a TAN, deduct and pay the TDS with interest, file the statement, and the 30% disallowance can be avoided if paid before the return due date.

  4. Conclusion

    1. Apply for TAN through Protean or UTIITSL
    2. Deduct and deposit the TDS with interest
    3. File the TDS statement for the quarter
    4. Keep TAN on all challans and certificates

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TDS default, Sec 200A / 201 (now 399 / 398)

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