The Income Tax Department has announced that starting from June 1, TAN (Tax Dedication and Collection Account Number) will be compulsory for all entities responsible for deducting or collecting tax at source. This directive applies to companies, government bodies, NGOs, startups, proprietorships, and any other organization engaged in transactions that attract TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) under the Income Tax Act. The move is part of a broader compliance framework designed to strengthen the nation’s tax collection infrastructure and plug revenue leakages.

Entities that fail to quote their valid TAN on tax-related documents, such as TDS returns, TCS returns, Form 16/16A certificates, and challan, may face penalties, rejection of filings, or delayed credit to payees. The department has clearly stated that no exceptions or exemptions will be granted, even to smaller organizations or those in the initial stages of operation. All deductors are advised to apply for TAN immediately, if not already in possession, to avoid disruptions in business transactions and statutory obligations.With this change, the department aims to enhance transparency and enable real-time cross-verification of tax deductions through integrated systems like TRACES and the PAN database. Tax professionals across the country have welcomed the decision, citing that uniform TAN enforcement will reduce discrepancies and disputes in TDS/TCS management. Organizations are urged to update their financial systems and internal compliance checklists to ensure smooth adherence from the June deadline onward.