The Income Tax Department has issued a stern warning that TAN (Tax Deduction and Collection Account Number) defaulters may soon face freezes on TDS-related refunds and processing delays. This action is targeted at entities, such as businesses, institutions, and government bodies, that consistently fail to comply with their TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) filing and payment obligations. The move is part of a broader crackdown on non-compliance and is designed to enforce stricter discipline among registered deductors.

Authorities have noted that a significant number of TAN holders have either delayed quarterly returns, failed to issue Form 16/16A, or submitted filings with major discrepancies. As a consequence, these entities may be flagged in the compliance tracking system and subjected to refund holds, demand notices, and penal actions under Sections 234E and 271H of the Income Tax Act. The department clarified that persistent defaulters will not be allowed to process any TDS-linked refund claims until their compliance record is cleared and dues are settled.

To avoid these punitive measures, TAN holders are being urged to verify their filing status via the TRACES portal, reconcile any mismatches, and promptly respond to tax department notices. Experts suggest that organizations conduct a quarterly compliance audit, ensure accurate PAN-TAN mapping, and maintain detailed records of all TDS transactions. The Income Tax Department’s message is clear: compliance is not optional, and failure to adhere to the rules could result in serious financial and operational consequences.