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206aa - invalid pan validated

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Dhawal Mohnot

Practicing

449 Points Posted on 21 August 2015

Thanks for your attention.

Wanted to share a peculiar situation incase of one of our clients.

At the time of filing original TDS return PAN mentioned was invalid, subsequently correction statement was filed and valid PAN was updated. HOWEVER, the justification report still shows 206AA demand.

If anyone has faced this issue before and knows the solution.

Thanks in advance.

Replies (1)

Dhawal Mohnot

Practicing

449 Points Posted on 22 August 2015

Sharing response received from Traces, sharing for benefit of all.

Your query related to PAN error default is analysed.

It is to inform you that the provisions of section 206AA apply at the time of tax deduction, which happens prior to the filing of statement. Thus, the deductor is expected to have a Valid PAN at the time of deduction. Only a typographical error is expected at the time of filing the TDS statement.

The demand in the hands of the deductors is being rectified in cases where the difference between the Invalid PAN and the Valid PAN is not more than 2 characters. This is being done in order to take care of the genuine typographical errors in data entry.

The rectification of demand in other cases is not done if the mismatch is more than two alpha characters & two numerics. Therefore, out of 10 characters in case of structurally valid PAN, 4 characters are being considered for rectification of demand.