Find
If a PAN in the statement is invalid or wrong, CPC treats the deductee as having no PAN and applies Sec 206AA (now Sec 397(2)), generally 20%. Correcting the PAN in a correction statement usually removes the default.
ITR
TDS default because the deductee PAN was wrong
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Provisions
Sec 206AA, Income-tax Act 1961 (now Sec 397(2), Income-tax Act 2025); Sec 200(3), Income-tax Act 1961 (now Sec 397(3)(b), Income-tax Act 2025); Sec 201, Income-tax Act 1961 (now Sec 398, Income-tax Act 2025)
Analysis
Get the correct PAN in writing from the deductee and check it on the portal. Example: you deducted 10% on ₹1,00,000 of professional fees but typed a wrong PAN; CPC shows ₹10,000 short deduction at 20%. After a PAN correction, the default falls to nil and the deductee also gets credit in Form 26AS (now Form 168). If the deductee genuinely had no PAN, the higher rate was due.
Close
- Collect the correct PAN and verify it on the e-Filing portal
- Prepare a PAN correction statement
- Upload it and check the processing status
- Tell the deductee when credit appears in their Form 26AS
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