Tds credited to partner's pan
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
28 December 2011
Sir,
A partnership firm providing construction services on contact basis. total turnover is 1 Crore.
It has given partners PAN no. to contractee at the time of taking contract. so Contractee deducted TDS from firm contract payment and filed TDS return on partner,s PAN card.
Contract income is credited to firm's bank account.
TDS deductor is not ready to file any correction return.
Now what is the solution for it.
How can firm get its refund ?
A partnership firm providing construction services on contact basis. total turnover is 1 Crore.
It has given partners PAN no. to contractee at the time of taking contract. so Contractee deducted TDS from firm contract payment and filed TDS return on partner,s PAN card.
Contract income is credited to firm's bank account.
TDS deductor is not ready to file any correction return.
Now what is the solution for it.
How can firm get its refund ?
28 December 2011
The firm cannot get refund on TDS not credited to its account. You will have to convince the deductor to file correction return and the fault lies with him. If the amount involved is huge you may threaten to take legal action against the deductor.
Querist : Anonymous
Querist :
Anonymous
(Querist)
28 December 2011
Thank you sir,
Amount is around Rs. 2 Lkhs and actually firm has given partners PAN card at the time of taking contract. so there is a mistake from our side.
How can we take a legal action against deductor.
Amount is around Rs. 2 Lkhs and actually firm has given partners PAN card at the time of taking contract. so there is a mistake from our side.
How can we take a legal action against deductor.
29 December 2011
You will have to persuade the deductor to file correction
Querist : Anonymous
Querist :
Anonymous
(Querist)
03 January 2012
Now Deductor giving the aurgument that PAN already been accepted as a valid PAN in NSDL system in regular return, so the revision can not be done.
Revision is possible only when PAN no is invalid in regular return.
Whether there is any problem in filing correction return by changing PAN no. of one deductee, if wrong PAN has been accepted as a valid PAN by NSDL system in regular return.
Revision is possible only when PAN no is invalid in regular return.
Whether there is any problem in filing correction return by changing PAN no. of one deductee, if wrong PAN has been accepted as a valid PAN by NSDL system in regular return.
27 July 2025
This is a tricky but not uncommon situation. Let me clarify the issue and your options:
---
### Issue Summary:
* The TDS deductor **deducted TDS against partners’ PAN instead of the firm’s PAN**, even though the contract was with the firm.
* TDS return filed by the deductor shows partners’ PAN(s), so TDS credit reflects against partners, **not the firm**.
* The firm’s actual income and bank receipts are in the firm’s name/PAN.
* Deductor refuses to revise/correct the TDS return on the grounds that the PANs were “valid” and accepted by NSDL.
* The firm cannot claim TDS credit on its tax return since the credit is booked against partners’ PAN.
---
### Key Points & Legal Position:
1. **TDS credit is allowed only against the PAN on which the tax is deducted and reported** in the TDS return.
So if deductor reports TDS against partners’ PAN, credit goes to partners only.
2. **It is a deductor's responsibility to deduct TDS against the correct PAN (in this case, the firm’s PAN).**
Wrong reporting leads to wrong credit allocation, which harms the firm.
3. **Section 200(3) of the Income Tax Act mandates the deductor to file TDS returns correctly and rectify mistakes.**
NSDL accepting the PAN as "valid" does not mean it is correct for that transaction. The deductor has a duty to file accurate returns.
4. **There is no bar on correcting PAN in TDS returns even if the PAN was accepted earlier**; the deductor can file a correction statement (TDS correction return) to rectify wrong PAN details.
---
### Remedies & Suggestions:
* **Persuade the deductor to file a correction statement** (TDS correction return) replacing the partners' PAN with the firm’s PAN for that payment.
* **If deductor refuses, write a formal notice/email to the deductor** highlighting their legal obligation under the Income Tax Act.
* **If the amount involved is significant (e.g., Rs. 2 lakhs), issue a legal notice through your tax lawyer or advocate to compel correction.**
* **If still no response, file a complaint with the Income Tax Department against the deductor for incorrect TDS return filing** (since incorrect PAN reporting is a violation).
* The firm can also mention this issue during assessment proceedings to avoid being denied credit unfairly and seek the department’s intervention.
---
### On deductor’s argument about NSDL acceptance of PAN:
* NSDL validates format and existence of PAN but **does NOT validate whether the PAN is correct for that transaction**.
* Courts and CBDT rulings clarify that correction statements can be filed to rectify such errors even after regular filing.
---
### References:
* **CBDT Circular No. 14/2008** on correction of TDS returns allows correction of PAN details even if previously accepted.
* **Income Tax Act, Section 200(3)** — mandates filing of correct TDS returns and correction of errors.
---
### Summary:
| Situation | Action |
| --------------------------------------------------------- | ---------------------------------------------------------- |
| Deductor deducted TDS on wrong PAN but filed valid return | Deductor must file correction statement to rectify PAN |
| Deductor refuses | Issue formal notice/legal notice; approach Income Tax Dept |
| Firm needs credit | Cannot claim until correction made |
---
If you want, I can help draft a formal notice/email for the deductor to request correction or guide you on filing a complaint with the Income Tax Department. Would you like me to help with that?
---
### Issue Summary:
* The TDS deductor **deducted TDS against partners’ PAN instead of the firm’s PAN**, even though the contract was with the firm.
* TDS return filed by the deductor shows partners’ PAN(s), so TDS credit reflects against partners, **not the firm**.
* The firm’s actual income and bank receipts are in the firm’s name/PAN.
* Deductor refuses to revise/correct the TDS return on the grounds that the PANs were “valid” and accepted by NSDL.
* The firm cannot claim TDS credit on its tax return since the credit is booked against partners’ PAN.
---
### Key Points & Legal Position:
1. **TDS credit is allowed only against the PAN on which the tax is deducted and reported** in the TDS return.
So if deductor reports TDS against partners’ PAN, credit goes to partners only.
2. **It is a deductor's responsibility to deduct TDS against the correct PAN (in this case, the firm’s PAN).**
Wrong reporting leads to wrong credit allocation, which harms the firm.
3. **Section 200(3) of the Income Tax Act mandates the deductor to file TDS returns correctly and rectify mistakes.**
NSDL accepting the PAN as "valid" does not mean it is correct for that transaction. The deductor has a duty to file accurate returns.
4. **There is no bar on correcting PAN in TDS returns even if the PAN was accepted earlier**; the deductor can file a correction statement (TDS correction return) to rectify wrong PAN details.
---
### Remedies & Suggestions:
* **Persuade the deductor to file a correction statement** (TDS correction return) replacing the partners' PAN with the firm’s PAN for that payment.
* **If deductor refuses, write a formal notice/email to the deductor** highlighting their legal obligation under the Income Tax Act.
* **If the amount involved is significant (e.g., Rs. 2 lakhs), issue a legal notice through your tax lawyer or advocate to compel correction.**
* **If still no response, file a complaint with the Income Tax Department against the deductor for incorrect TDS return filing** (since incorrect PAN reporting is a violation).
* The firm can also mention this issue during assessment proceedings to avoid being denied credit unfairly and seek the department’s intervention.
---
### On deductor’s argument about NSDL acceptance of PAN:
* NSDL validates format and existence of PAN but **does NOT validate whether the PAN is correct for that transaction**.
* Courts and CBDT rulings clarify that correction statements can be filed to rectify such errors even after regular filing.
---
### References:
* **CBDT Circular No. 14/2008** on correction of TDS returns allows correction of PAN details even if previously accepted.
* **Income Tax Act, Section 200(3)** — mandates filing of correct TDS returns and correction of errors.
---
### Summary:
| Situation | Action |
| --------------------------------------------------------- | ---------------------------------------------------------- |
| Deductor deducted TDS on wrong PAN but filed valid return | Deductor must file correction statement to rectify PAN |
| Deductor refuses | Issue formal notice/legal notice; approach Income Tax Dept |
| Firm needs credit | Cannot claim until correction made |
---
If you want, I can help draft a formal notice/email for the deductor to request correction or guide you on filing a complaint with the Income Tax Department. Would you like me to help with that?
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