TaxTMI 
TaxTMI 
TDS Return PAN-Inoperative instead of PAN and AADHAR already linked
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....DS Return PAN-Inoperative instead of PAN and AADHAR already linked<br> Query (Issue) Started By: - milan bamal Dated:- 12-8-2025 Last Reply Date:- 19-12-2025 Income Tax<br>Got 2 Replies<br>Income Tax<br>Dear Team, We filled TDS return Q-1 25-26 recently of our firm. PAN and aadhar has been already linked of all dedutees.But TDS return processed with default i.e 2 PAN out of all PANs is Non-opera....
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....tive and demand 20% TDS instead of 1%.But PAN and Aadhar has been already linked as we have checked on income tax portal at Aadhar link status. What is the solution Reply By Ryan Vaz: The Reply: * Section 206AA, Income-tax Act, 1961 - Higher TDS @20% for non-furnished PAN * Section 139AA(2) - PAN becomes inoperative if Aadhaar not linked * CBDT Circular No. 3/2023 dated 28-0....
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....3-2023 - PAN becomes operative from the date Aadhaar is linked, not retrospectively * Section 154 - Rectification of mistakes apparent on record Short Practical Answer This happens due to timing mismatch. Even if PAN-Aadhaar is linked now, CPC-TDS validates PAN status as on the date of deduction. If Aadhaar was linked after the TDS deduction date, CPC correctly applied 20% TDS, causing d....
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....emand. Solution depends on the Aadhaar-linking date vs TDS deduction date. Reply By Ryan Vaz: The Reply: Detailed Steps / Resolution Options Step 1: Verify Aadhaar Linking Date (Very Important) For each affected deductee: * Login ? Income-tax Portal * PAN ? Aadhaar Linking Status * Check "Date of Linking" Scenario A: Aadhaar was linked AFTER TDS deduction date ? CPC-TDS demand is....
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.... legally correct What you must do: * Deduct shortfall TDS (19%) from deductee OR * Pay TDS yourself (grossing up if required) * Pay interest u/s 201(1A) * File correction statement (C1/C3 as applicable) ?? No rectification allowed in this case. Scenario B: Aadhaar was linked BEFORE TDS deduction date ? Demand is incorrect Correct Remedy - File Rectification u/s 154 * Login....
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.... ? TRACES * Defaults ? Request for Rectification * Select reason: PAN is operative but treated as non-operative * Upload PDF evidence: * PAN-Aadhaar linking confirmation * Screenshot showing linking date prior to deduction * Submit request ? Rectification usually resolved in 30-45 days Step 2: If Rectification is Rejected Escalate via: * e-Nivaran / Grievance on Inc....
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....ome-tax Portal * Attach: * 154 rejection order * Aadhaar linking proof * TRACES justification report Important Practical Notes * CPC-TDS does not auto-update PAN operative status for past periods * Linking Aadhaar does NOT have retrospective effect (CBDT Circular 3/2023) * Many deductors face this issue in FY 2023-24 onwards Action Plan (Quick Checklist) * ? Check....
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.... Aadhaar linking date vs deduction date * ? If linked late ? Pay differential TDS + interest * ? If linked earlier ? File 154 rectification on TRACES * ? Keep documentary proof ready * ? Track rectification status regularly When Human Review Is Needed * If demand is large * If deductee refuses recovery * If multiple rectifications are rejected * If assessment or pe....
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