It has to be quoted in TDS/TCS returns, payment challans and certificates that are to be issued. It is used for deductions, such as salary, interest, dividend, etc. It records the address of the person who deducts the tax on behalf of the IT department.

While TAN is a number allocated to tax-deductors, PAN or Permanent Account Number is allotted to taxpayers. PAN is also a 10-digit identity number that is mandated by the Income Tax Department for any individual who carries out financial transactions or pays the Income Tax.

TAN or Tax Deduction and Collection Account Number is a 10 digit alpha numeric number required to be obtained by all persons who are responsible for deducting or collecting tax. It is compulsory to quote TAN in TDS/TCS return (including any e-TDS/TCS return), any TDS/TCS payment challan and TDS/TCS certificates.

The 5th to the 9th digit is numerical. The 10th digit is again a capital letter. For example, a TAN number should look like PDES03028F. Anyone who is liable to deduct TDS from their payments must get a TAN card which they must then quote when issuing payments or getting TDS returns.