Business PAN and TDS deduction account

Category: Business Registration. From ₹499. Typical timeline: 3–5 days.

Overview

PAN (Permanent Account Number) and TAN (Tax Deduction and Collection Account Number) are the two foundational tax identifiers every business entity needs — PAN to file income tax returns and conduct financial transactions, and TAN to deduct and deposit TDS on payments like salaries, rent or professional fees. Most other registrations, including GST and bank accounts, depend on these being in place first.

Who needs it

• Newly formed partnership firms, trusts and societies needing a business PAN
• Any business that pays salaries, rent or professional fees above TDS threshold limits
• Sole proprietors setting up a business bank account for the first time
• Entities that missed automatic PAN/TAN issuance during incorporation and need standalone application

Eligibility

• Any company, LLP, partnership firm, trust or individual carrying on business needs a business PAN
• TAN is mandatory for any entity required to deduct or collect tax at source under the Income Tax Act
• New companies and LLPs receive PAN and TAN automatically as part of SPICe+ incorporation
• Proprietorships and partnership firms need to apply separately if not obtained during other registrations

Documents required

• Identity and address proof of the applicant/authorised signatory
• Certificate of incorporation or partnership deed/trust deed as applicable
• Proof of business address
• Passport-size photograph (for individual applicants)

Process

1. Application form selection — Choose Form 49A for PAN and Form 49B for TAN based on entity type.
2. Document preparation — Compile identity, address and constitution documents of the entity.
3. Online filing — Submit the application through the NSDL/Protean or UTIITSL portal with digital or physical signature.
4. Certificate issuance — PAN card and TAN allotment letter are issued after verification, typically delivered electronically first.

Government fees

• PAN application fee: ₹107 for Indian communication address (approx., inclusive of taxes)
• TAN application fee: ₹65 (approx., inclusive of taxes)

Professional fee

Kanoons charges ₹499 for combined PAN and TAN application and follow-up until certificates are issued.

Timeline

PAN and TAN are typically issued within 3–5 working days of application, faster when applied for as part of company/LLP incorporation.

Deliverables

• PAN card/e-PAN
• TAN allotment letter
• Acknowledgment receipts for both applications

Frequently asked questions

Do companies need to apply for PAN separately?

No, PAN and TAN are issued automatically as part of the SPICe+ incorporation process for companies and LLPs.

Can a business operate without TAN if it does not deduct TDS?

Yes, TAN is only required if the entity is liable to deduct or collect tax at source; businesses without such obligations do not need it.

How long is a PAN valid?

PAN has no expiry and remains valid for the entity's lifetime unless surrendered or cancelled.

Common mistakes

• Applying for a fresh PAN when the entity already has one, leading to duplicate PAN issues
• Not applying for TAN before the first TDS deduction is due, causing compliance delays
• Mismatched name or address details between PAN application and other registration documents
• Delaying TAN application until after the first TDS payment deadline

Penalties for non-compliance

• Failure to obtain TAN before deducting TDS attracts a penalty of ₹10,000 under Section 272BB of the Income Tax Act
• Quoting incorrect PAN in financial transactions can attract penalty of ₹10,000 under Section 272B
• Not deducting TDS due to absent TAN can lead to disallowance of the related expense under Section 40(a)(ia)

Legal references

• Income Tax Act, 1961, Section 139A — PAN requirement
• Income Tax Act, 1961, Section 203A — TAN requirement for TDS/TCS
• Income Tax Rules, 1962, Rule 114 and 114A — PAN and TAN application procedures