Structurally Valid but actually Invalid PAN in TDS statement – Impact , Action to be taken

Deductees reported in TDS Statements with structurally Valid, but actually Invalid PANs

Centralized Processing Cell (TDS) has observed from its records that you have reported deductees with invalid PANs in your quarterly TDS statements. These PANs appear structurally valid, however, they are actually invalid, as they are not available in the PAN Master records.

For example, ARUPS4625S appears to be a valid PAN according to the alphabets and numerals in its structure, however, this is an invalid PAN, as this is not available in PAN Master.

What is the impact :

• The impact of such errors is significant in nature, in view of following :
  • As per section 206AA, the tax is to be deducted at a higher rate, in case of reporting of invalid PANs. Therefore, Short Deduction is charged even if the tax has been deducted at the Section Rate, due to the applicability of section 206AA.
  • The deductor will not be able to generate TDS Certificates for their deductees with invalid PANs.
  • The taxpayer will not be able to avail correct TDS Credits

What actions to be taken :

The impact of such errors is significant in nature, in view of following :

• PAN Verification facility on TRACES can be used for verifying the deductees. You are requested to Login to TRACES and
  navigate to “Dashboard” to locate “PAN Verification” in the Quick Links menu.
• You can also use “Consolidated TAN – PAN File” that includes all the valid PANs attached with the respective TANs. To
  avail the facility, Login to TRACES and navigate to “Dashboard” to locate “Consolidated TAN – PAN File”.
• To correct an invalid PAN reported earlier, a C5 Correction Statement is required to be filed.
• The PANs can also be corrected using our Online Correction facility
  with Digital Signatures. To avail the facility, you are requested to Login to TRACES and navigate to “Defaults” tab to locate “Request for Correction” from the drop-down menu.