An efficient improved synthesis of Tazobactam 1 (a β-lactamase inhibitor), is described here. This efficient process provides 40-45% higher yield of 1 in comparison to the first generation manufacturing process and which is concise and amenable for large scale synthesis. Process related impurities of Tazobactam diphenylmethyl ester 8 have been identified by LC-MS. Further these related impurities are synthesized, isolated and characterized by spectral studies.