The Income Tax Department has issued an advisory warning businesses against improper sharing or misuse of TAN (Tax Dedication and Collection Account Number) by vendors or third-party service providers. The department emphasized that TAN is a sensitive compliance credential, and its misuse can lead to serious consequences, including wrongful deductions, fraudulent filings, and misrepresentation in tax returns, all of which fall under the purview of penal action as per the Income Tax Act, 1961.

According to the advisory, there have been increasing instances where vendors or intermediaries have used clients’ TANs to file unrelated TDS returns, claim tax credits, or create false compliance reports, often without the knowledge of the actual TAN holder. Such unauthorized usage can lead to mismatches in Form 26AS, delayed refunds for deductees, and scrutiny notices to the original TAN holder. Businesses are therefore instructed to restrict TAN access to verified internal finance personnel or trusted authorized agents only, and to periodically audit TAN activity through the TRACES portal.

The department recommends that firms implement strict internal protocols, including role-based access control, digital signature usage, and centralized TDS compliance oversight, to safeguard their TAN-related operations. Any suspicious activity should be reported immediately through the Income Tax grievance system. This warning aligns with the government’s push to enhance data integrity and deductor accountability in the evolving digital tax ecosystem, ensuring that TAN remains a secure, traceable compliance identifier.