NRI Income Tax Refund Delayed Because Of PAN Name Mismatch? Know What To Do

As an NRI, there are days when you feel like you have successfully filed your income tax return, only to find that the refund isn't credited to your bank account. This can happen for many reasons, but a key one is a name mismatch between your bank account and your PAN. 

Even a single spelling error or a slight discrepancy can cut short your tax refund payment. 

In this blog, we will discuss how NRIs can resolve a name-mismatch issue and stay compliant so that such instances do not occur again. 

When are income tax refunds issued?

For NRIs, Income tax refunds are issued when your total tax liability is less than the taxes you have paid to the government through advance tax, TDS for NRI (tax deducted at source), or other means. 

In a nutshell, if the amount paid in taxes via TDS (tax deducted at source), TCS, Advance Tax, or Self Assessment Tax exceeds the actual due amount, then you will be eligible to get a refund of the excess amount paid. 

Common Reasons For The Name Mismatch

A name mismatch can occur for an array of reasons, such as

• Spelling error
• Difference in the name sequence
• Longer or shorter names or
• Married/maiden name.

For example, Mr Rajeev is an NRI who lives in the USA. He opened a bank account in India through this PAN card, and his PAN card name shows "Rajeev Kumar Sharma", but the bank account lists it as "Rajeev K Sharma"; hence, the system will flag it as a mismatch. 

How Can a Name Mismatch Affect The Return

Income tax refunds are issued only to pre-validated bank accounts via Electronic Clearing Services (ECS). Hence, the name on the bank account must exactly match the name on your PAN card. 

How To Rectify A PAN Name Mismatch

To rectify the name mismatch, please follow the steps below:

 Update the Bank Account Details: To do so, provide your PAN card copy and other required identification documents to your bank. You can then request the bank to update the account information to match the PAN card details. 

Apply for a Name Change in PAN: In cases where updating the bank account is not feasible, you can apply for a name change on your PAN card. It is also done when you get married and your surname changes, or for other reasons, some alternatives have been made in your name. 

To do so, you must file out a correction form and provide all the necessary documents. Once the name on your PAN card is updated, you can reissue the income tax refund from the income tax portal. 

The processing time for PAN name corrections is typically 10 to 20 business days. 

Will The Interest On the Delayed Tax Refund be Provided Due To A Name Mismatch

Section 244A of the Income Tax Act mentions that you will be entitled to interest on the tax return amount at the rate of 0.5% per month, which makes 6% annually. 

However, in a scenario such as a name mismatch, you are not entitled to avoid interest, as the delay is not due to the Department of Income Tax. 

A Practical Example

Here is an example explaining the delay in the refund for the NRI with a PAN name mismatch. 

Mr Abhilash Patel is an NRI living in Georgia. He filed his ITR as NRI to get the TDS refund in India and expects an income tax refund of approximately Rs 40,000. 

The refund was delayed because Mr Abhilash Pan's card shows "Abhilash Singh Patel" while his bank account name was "Abhilash Patel". 

He corrected his PAN card name online, then revalidated his NRO account on the income tax portal, and got his refund within a few business days. 

This is how even a minor name mismatch can delay your income tax refund for a long time. 

Tips To Avoid Name Mismatch

The following are a few tips you must follow to ensure such mistakes do not happen:

Use your full name: Always use your full name, that is, your first name, middle name, and last name/surname, throughout the use of any abbreviations while filing any government or official form. This should be done especially in your PAN applications and supporting documents.

Ensure Consistency: The name on your PAN card must match exactly the name on your Aadhaar card, bank records, or other official documents. In a nutshell, use one consistent name across all your documents. 

Verify Details Thoroughly: Before submitting an official form, such as a NEW PAN or PAN correction, please double-check all information and personal details you have entered accurately, including spelling, DOB, and your father's name, etc. 

The Bottom Line

For seamless processing of your tax refunds, your PAN card name must match your bank account name. If there are any mismatch problems, update your bank or PAN details to avoid delays in receiving the funds. 

For more detailed and expert guidance on how to handle name mismatches efficiently or with other tax-related queries, please contact our expert tax advisers or reach out to us directly at Savetaxs. 

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