1. Introduction

      Section 397 of the Income Tax Act, 2025 establishes a comprehensive framework governing Tax Deduction at Source (TDS) and Tax Collection at Source          (TCS). The provision ensures proper identification, reporting, and tracking of tax transactions and primarily covers:

• Allotment and mandatory usage of Tax Deduction and Collection Account Number (TAN)
• Compulsory quoting of Permanent Account Number (PAN)
• Higher tax implications in cases of non-furnishing of PAN
• Payment, reporting, and correction of TDS/TCS statements

      This framework is designed to enhance transparency, strengthen compliance, and prevent revenue leakage.

2. Requirement of TAN (Section 397(1))

      2.1 Mandatory Application for TAN

      Every person responsible for deducting or collecting tax is required to:

• Obtain a TAN if not already allotted
• Apply within the prescribed time to the designated income-tax authority

      TAN is a prerequisite for undertaking any TDS/TCS activity and forms the basis for all related filings and reporting.

      2.2 Mandatory Quoting of TAN

      Once allotted, TAN must be quoted in all relevant documents, including:

• Tax payment challans
• TDS/TCS returns and statements
• TDS/TCS certificates
• Other prescribed transaction documents

      Proper quoting ensures traceability and linkage of transactions with the tax system.

      2.3 Exceptions

      The requirement to obtain TAN does not apply to:

• Certain specified cases of tax deduction under Section 393
• Persons specifically notified by the Central Government
• Other prescribed categories

3. Application for Allotment of TAN (Rule 216)

      The procedure for obtaining TAN is governed by Rule 216, which prescribes the forms, authority, timelines, and documentation requirements.

      3.1 Prescribed Forms

      The application must be made in the following forms based on the applicant category:

• Form No. 134 → For Government entities
• Form No. 135 → For non-Government entities

      The Central Government may also introduce a common application form to simplify and standardize the process for notified applicants.

      3.2 Authority for Submission

      The application is required to be submitted to:

• The officer designated by the Director General of Income-tax (Systems)

      Such centralized allocation ensures a streamlined and technology-driven process for TAN allotment.

4. Time Limit for TAN Application

      4.1 Pre-Transaction Requirement

• The application for TAN must be made before the deduction or collection of tax

      This establishes TAN registration as a pre-condition for TDS/TCS compliance.

      4.2 Post-Facto Compliance

      In cases where TAN is not obtained beforehand:

• The application must be filed within 30 days from the end of the month in which tax was deducted or collected

      This provision allows delayed compliance within a defined regulatory window.

5. Documentation Requirements

      The application for TAN must be supported by prescribed documents (aligned with Rule 158), including:

• Proof of identity
• Proof of address
• Proof of date of birth or incorporation

     The nature of documentation varies based on the type of applicant (individual, company, firm, etc.), ensuring proper verification and authenticity of the               applicant.

6. Conclusion

      Section 397 read with Rule 216 provides a structured and time-bound compliance mechanism for TAN registration and usage within the TDS/TCS                        ecosystem. The provisions emphasize:

• Mandatory pre-registration before tax transactions
• Standardized documentation and verification
• Centralized processing through designated authorities

      For businesses and deductors, timely compliance with TAN requirements is essential to ensure seamless tax deduction, reporting, and regulatory                        adherence.