The Central Board of Direct Taxes (CBDT) has issued a special notification addressing the growing issue of TAN (Tax Deduction and Collection Account Number) non-usage, highlighting patterns of registered deductors who fail to file TDS/TCS returns or utilize their TANs for extended periods. The board has observed that a significant number of entities—ranging from businesses and NGOs to co-operative societies and government units—have obtained TANs but are not actively using them, creating compliance gaps, data mismatches, and administrative inefficiencies within the tax reporting ecosystem.

As per the notification, such inactive TANs may soon be flagged for deactivation or audit, and entities could face penalties under Section 272BB if found to be holding and quoting TANs without fulfilling the corresponding filing and deduction obligations. The CBDT emphasized that even if an organization is not currently liable to deduct or collect tax, it must either file a nil return or surrender the unused TAN formally to avoid future scrutiny or automated compliance triggers from the TRACES system.

To support this enforcement, the department is deploying analytics and AI tools to identify high-risk non-usage trends and initiate targeted communication with defaulters. Entities with dormant or unused TANs are advised to log in to the NSDL e-Gov portal, review their TAN activity history, and take appropriate steps, either by updating their records, initiating compliance, or surrendering their TAN. This notification marks a proactive step by the CBDT to ensure that TAN allotments translate into actual and transparent tax compliance, strengthening India’s digitized financial governance.