PAN Verification Failed During Loan/Investment? Quick Fixes for KYC and Financial Services

PAN verification problems arise when there's a discrepancy between your PAN information and the documents you provided, or when your PAN has not been linked with your Aadhaar. Such problems can delay your loan or investment applications, but can also be resolved with a few simple steps. This blog expands on KYC quick fixes to overcome verification issues. Keep reading to know more!

Quick Fixes for KYC and Financial Services (Loan/Investment)

If your PAN verification fails while applying for a loan or a new investment, chances are you'll receive an intimation about the same. Depending on why the failure occurred, you can resort to the following measures to fix it.

Here's a quick look at the scenarios and fixes before moving on to a detailed explanation:

Update PAN Details

A mismatch or problem in your PAN details, such as your name, date of birth, or father's name, can cause verification errors. Even minor discrepancies, like using initials or having a blurry photograph, can lead to discrepancies such as rejection of a Personal Loan application.

To resolve this, you need to update your PAN details through the Protean (NSDL) or UTIITSL portals. Normally, supporting documents required are your Aadhaar, a passport, or a valid driver’s licence. Once submitted, it typically takes 15-20 working days for your details to be updated in the central Income Tax Department database.

If you've made the required changes a while ago but the status isn't updated, you'll need to raise a grievance with the Income Tax Department through their online portal.

Also Read: Applying for a PAN Card Loan Online: Steps and Benefits

Link Your PAN with Aadhaar

Failing to link your PAN with Aadhaar is one of the most common reasons for PAN verification failures. The government has made it a rule for all PAN holders to link it with their Aadhaar card; a PAN that isn't linked is marked as 'inoperative', and its usage is restricted across financial applications, investments, and tax filing.

You can check if your PAN is linked to Aadhaar by visiting the Income Tax e-filing portal. If it’s not, use the "Link Aadhaar" tool on the portal to complete the process. This can be done quickly, and once successful, the update usually reflects within a few days. However, you may need to pay a nominal late fee if the task at hand had a deadline for the linking.

Ensure Consistency Across All KYC Documents

The details on your PAN card may be updated, but any inconsistency in your personal details, from a name mismatch to a difference in permanent address, will lead to verification issues.

To avoid this, cross-check the details across all your KYC documents before reapplication. Ensure that your name, date of birth, and father’s name are the same. If discrepancies are found, you should first correct your primary identification documents, usually your PAN or Aadhaar. Keeping these records consistent helps prevent delays and ensures your application is processed smoothly the second time around.

Also Read: Understanding e-KYC: A Detailed Guide

Reactivate PAN Card

Over the past decade, the Income Tax Department has been conducting a drive to deactivate PAN cards in the event of one person having multiple PANs. By law, it’s illegal for one person to own more than one PAN card. However, several people may have multiple PAN cards without their knowledge, as a typical result of applying through multiple means. In some cases, since the cancellation happens without any contact or intimation, the department may cancel the PAN that the user regularly uses for financial activities.

If this has happened with you, your income tax e-filing login will also be blocked. In this case, you need to reactivate your PAN by writing a letter to your jurisdictional AO (Assessment Officer) in the Income Tax Department requesting reactivation. You will also need to attach proof of use of the card, typically a copy of the PAN, an Indemnity Bond in favour of the Income Tax Department, and a copy of the past 3 years’ Income Tax Returns.

Also Read: Step-by-Step Guide to Apply for a PAN Online with Aadhaar e-KYC

To Conclude

Encountering a PAN verification failure can be frustrating, but it’s usually fixable with a few simple steps. By updating your PAN details, linking it with Aadhaar, ensuring consistency across your KYC documents, and checking your PAN’s status, you can resolve these issues and keep your loan or investment applications on track.

Frequently Asked Questions

What is a pan discrepancy?

A PAN discrepancy occurs when the details on your PAN card, such as name or date of birth, do not match the information provided in other KYC documents like Aadhaar or bank account records. This can result from typographical errors, use of initials, or updates not being made uniformly across all documents.

How long does it take to correct PAN details?

After submitting a correction request online through the Protean or UTIITSL portal, it typically takes between 15 and 20 working days for the updated information to appear in the Income Tax Department's records.

Will my loan be rejected if PAN Verification failed?

Not necessarily. Financial institutions usually notify you of the failed verification and allow you to rectify the issue within a stipulated window. If you quickly address the problem by updating your documents and correcting incorrect details, your application can proceed without starting from scratch.

Is linking PAN with Aadhaar mandatory for loans?

Yes. As per government guidelines, an unlinked PAN becomes inoperative and will not pass verification checks required in the KYC process by lenders and investment firms. Linking PAN and Aadhaar remains compulsory for all financial transactions.

Can I check my PAN status online?

Yes. The official Income Tax Department portal offers a "Verify Your PAN" service. By entering your PAN number and other basic details, you can confirm whether your PAN is active and valid for use in financial services. It is important to ensure that the details on the KYC form match exactly as per the database.

What is KYC compliance and how is it important?

KYC compliance refers to the regulatory process where financial institutions verify the identity of their customers. It’s crucial because it ensures that institutions are not dealing with fraudulent individuals or entities and helps in the prevention of money laundering and terrorist financing.

What are KYC procedures and how do they work?

KYC procedures involve the steps that financial institutions take to verify the identity of their clients, typically by collecting documents like identity proof, address proof, and other personal information. These procedures help ensure that only legitimate customers gain access to financial services.

How is identity verification done during the KYC process?

Identity verification in KYC involves confirming the authenticity of the customer’s identity by reviewing documents like a government-issued ID, Aadhaar, or passport. This step ensures that the person is who they claim to be, making the application process more secure.

What identity proof is required for KYC verification?

For KYC verification, identity proof is crucial. Common documents accepted include Aadhaar card, passport, voter ID, and driver’s license. These documents help verify the customer's identity and ensure they are eligible for financial transaction