The Income Tax Department has officially announced that TAN (Tax Deduction and Collection Account Number) compliance will now be subject to regular audits by designated tax assessment teams. This initiative aims to reinforce the accountability of TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) processes, and to curb systemic defaults by businesses, government departments, NGOs, and professional entities registered as TAN holders. The audits will focus on reviewing whether the entities have properly deducted, deposited, and reported taxes as per the provisions of the Income Tax Act, 1961.

The audit teams will assess a range of compliance parameters, including timely filing of quarterly returns (Form 24Q, 26Q, 27Q, and 27EQ), correct PAN-TAN linkage, challan reconciliations, and issuance of TDS certificates. Failure to meet the standards may trigger enforcement actions such as demand notices, penalty imposition under Sections 234E and 271H, or even temporary suspension of refund claims. The department has also indicated that entities with repeat or significant discrepancies may face intensive scrutiny and follow-up inspections.

To prepare for these audits, all TAN holders are advised to conduct internal reviews, reconcile their TDS records, and ensure that no returns are pending or inaccurately filed. The government has also recommended maintaining updated documentation, audit trails, and correction statements as part of a proactive compliance strategy. With this move, the department seeks to instill a culture of early, consistent, and accurate tax compliance, reinforcing the role of TAN as a critical identifier in India’s tax infrastructure.