Have you successfully filed your Income Tax Return (ITR) but found that your tax refund hasn’t been credited to your bank account? This could be due to a name mismatch between your PAN and bank account. Even a slight discrepancy can halt the tax payment. Read on to understand your options and how to resolve this issue.
When Are Income Tax Refunds Issued?
Income tax refunds are issued when your total tax liability is less than the tax already deposited with the government through TDS, advance tax, or other means. Essentially, if the amount paid in taxes exceeds the actual amount due (through TDS, TCS, Advance Tax, or Self-Assessment Tax), you are eligible for a refund of the excess amount.
How Can a PAN Name Mismatch Affect Your Tax Refund?
Tax refunds are issued only to pre-validated bank accounts through the Electronic Clearing Service (ECS). The name in the bank account must match the name on the PAN card. If there is a discrepancy, the tax department will not issue a refund.
For instance, if a bank account was opened using a passport and the name on the passport differs from the PAN records, the Income Tax Department will not process the refund. In such cases, you may need to apply for a name change on your PAN or update the name in your bank account to match the PAN details.
How to Resolve a PAN Name Mismatch?
To resolve a name mismatch, follow these steps:
Update Bank Account Details: Provide a copy of your PAN card and other necessary identification documents to your bank. Request them to update the account information to match the PAN card details.
Apply for a Name Change in PAN: If updating the bank account is not feasible, you can apply for a name change on your PAN card by filling out a correction form and providing the necessary documents. Once the PAN details are updated, request a reissue of the refund from the income tax portal.
Will You Get Interest on a Delayed Tax Refund Due to a Name Mismatch?
According to Section 244A, you are entitled to interest on eligible tax refund amounts at a rate of 0.5% per month (6% per annum). However, you will not receive interest for the period during which the refund could not be credited due to the name mismatch, as this delay is not attributable to the income tax department.
What Are Your Options If There Is a Name Mismatch?
If your tax refund has been stopped due to a name mismatch, you have two main options:
Correct the Name on Your PAN: Fill out a PAN correction form and provide the necessary documents.
Update the Name in Your Bank Account: This might be a quicker fix than changing the PAN. Submit the required documents to your bank to update your account details.
Conclusion
Ensuring that your bank account name matches the name on your PAN card is crucial for the smooth processing of tax refunds. If you encounter a name mismatch issue, promptly update your bank or PAN details to avoid delays in receiving your refund. Correcting a name mismatch can save you from unnecessary hassles and ensure timely credit of your tax refunds.
For more detailed guidance on handling name mismatches and other tax-related queries, consult with your tax advisor or reach out to us at Dinesh Aarjav & Associates.
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