The Government of India, through the Income Tax Department, has issued a formal advisory to all employers and payroll processors regarding the mandatory use of TAN (Tax Deduction and Collection Account Number) for salary-related tax deductions. As per this advisory, any entity—be it a company, partnership firm, trust, or government department—that deducts TDS (Tax Deducted at Source) on salaries under Section 192 of the Income Tax Act must possess and quote a valid TAN in all tax-related filings and communications.

This move comes in response to the growing need for accurate and traceable salary tax deductions, especially in large organizations with complex payroll structures. The advisory emphasizes that quoting a valid TAN is essential while filing Form 24Q (TDS return for salaries), issuing Form 16 to employees, and making monthly deposits of TDS to the government. Employers who fail to comply may face penalties, disallowance of expenses, and legal consequences, as per Sections 234E and 271H of the Income Tax Act.

To support compliance, the department has recommended that employers use the TRACES portal and NSDL systems for verification and correction of TAN-related details. Organizations setting up payroll for the first time or expanding to new jurisdictions are urged to verify their TAN status, apply for new TANs if necessary, and train HR and finance teams on updated filing procedures. This advisory is seen as part of the government’s broader campaign to enforce uniformity and accuracy in tax deduction practices across sectors.