Introduction

A Permanent Account Number (PAN) mismatch in a Tax Deducted at Source (TDS) return can lead to several complications, such as non-reflection of TDS in Form 26AS, denial of TDS credit, and income tax notices. A mismatch typically occurs due to incorrect PAN entry, typographical errors, or use of an inactive or invalid PAN. It is crucial for deductors to ensure that all TDS entries are accurately matched with the deductee’s PAN to facilitate proper tax credit. Fortunately, the Income Tax Department provides a systematic method to correct such errors through the filing of a revised TDS return.

1. Understand the Nature of PAN Mismatch

A PAN mismatch usually happens when the PAN quoted in the TDS return does not match the PAN details in the Income Tax Department’s database. This could be due to typographical errors, incorrect PAN structure, or quoting a wrong PAN against a deductee.

2. Effects of PAN Mismatch

When a PAN mismatch occurs, the deductee’s TDS does not reflect in Form 26AS. This can lead to difficulties while filing income tax returns and may result in short credit or tax demand notices. The deductor also risks penalties for incorrect TDS reporting.

3. Access the TRACES Portal

To correct PAN mismatches, the deductor must visit the TRACES (TDS Reconciliation Analysis and Correction Enabling System) portal atThe deductor must log in using their TAN credentials and navigate to the ‘Defaults’ or ‘Correction’ section.

4. Download the Conso File

Before submitting a correction, the deductor must download the Consolidated File (Conso File) for the relevant financial quarter from TRACES. This file contains details of all deductees and can be edited to correct the PAN entries.

5. Use TDS Return Preparation Utility

After downloading the Conso File, use the Return Preparation Utility (RPU) provided by NSDL or third-party software to open and edit the TDS return. Enter the correct PAN in place of the incorrect one and validate the return with the File Validation Utility (FVU).

6. Obtain PAN Verification

Before making corrections, ensure that the correct PAN is verified using the PAN Verification facility on the TRACES or NSDL website. This helps avoid repeating errors and ensures the PAN belongs to the correct deductee.

7. Submit the Revised TDS Return

Once the return is corrected and validated, it must be submitted through the TIN-Facilitation Center or uploaded online using the TIN NSDL website. Select “Correction” as the type of return and ensure the revised return is uploaded for the same quarter and form type.

8. Track Correction Status

After submission, the status of the correction can be tracked on TRACES using the ‘Track Correction Request’ feature. This will indicate whether the revised return is processed, under review, or accepted.

9. Intimate the Deductee

Once the corrected return is processed, the TDS details will reflect correctly in the deductee’s Form 26AS. The deductor should inform the deductee about the correction so they can verify the update and file their return without discrepancy.

10. Preventing Future PAN Mismatches

To avoid PAN mismatches in the future, deductors should always collect self-attested PAN copies from deductees and verify PANs online before submitting TDS returns. Proper documentation and verification help maintain accurate records and compliance.

Conclusion

Correcting a PAN mismatch in a TDS return is essential to ensure proper credit of tax deducted and to avoid unnecessary disputes or penalties. By following the structured correction process through the TRACES portal and NSDL utilities, deductors can rectify errors efficiently. PAN acts as the cornerstone of tax identification, and its accurate usage ensures that both deductors and deductees remain compliant with tax regulations. Timely correction of mismatches safeguards against future complications and supports a smooth tax filing experience for all parties involved.

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