May 31 SFT Deadline: Wrong PAN Entries Can Delay Your ITR Refund

The May 31 deadline for filing Statement of Specified Financial Transactions (SFT) for financial year 2025-26 shifts the practical burden onto taxpayers, not just the banks and mutual funds required to report. Invalid PAN details, duplicate entries, and incorrect transaction values in SFT filings create mismatches in the income tax department's records. Those mismatches can trigger scrutiny notices or delay refunds during ITR processing.

The income tax department's own analysis of SFT filings, reported by PTI, identified recurring errors: duplicate transaction reporting, incorrect transaction values, and missing or wrong PAN details. These mistakes are more common in joint accounts or jointly held investments, where values may be reported incorrectly. Weak internal checks and delays in SFT submission compound the problem.

Taxpayers can review reported transactions through the Annual Information Statement (AIS) or Taxpayer Information Summary (TIS) on the Income Tax India e-filing portal. If inaccuracies appear, the remedy is to submit a disagreement through the AIS portal with supporting documents. The department uses SFT data to cross-check taxpayer disclosures during ITR processing. Any mismatch between what you declare and what is reported can lead to scrutiny.

How SFT Filing Works and What It Covers

SFT is a reporting mechanism under Section 285BA of the Income Tax Act. Specified entities file Form 61A to report material financial transactions. The annual filing covers transactions recorded in the preceding financial year, with a deadline of May 31. Transactions in listed securities and mutual fund units require half-yearly filing.

The following transactions are reported in SFT by specified entities:

Cash deposits and withdrawals above a threshold
Credit card payments exceeding a limit
Purchase or sale of immovable property above a value
Transactions in listed securities and mutual fund units
Foreign remittances above a threshold
Bonds and debentures transactions

The Cross-Check Mechanism

The tax department matches SFT data against the income declared in a taxpayer's ITR. A mismatch does not automatically mean a notice. It increases the probability of one. The department's analysis of SFT filings by banks and mutual funds has flagged specific recurring issues that directly affect this matching process.

Common Filing Errors: Duplicate Entries, Wrong PAN, Incorrect Values

According to a PTI report, the income tax department's analysis of SFT filings by banks and mutual funds identified several recurring issues. These errors are not just administrative problems for filers. They directly affect taxpayers whose records get contaminated.

Duplicate Transaction Reporting

When the same transaction is reported more than once, the AIS shows inflated figures. A taxpayer who declared accurate income may appear to have undisclosed financial activity. The department's system flags the difference, potentially triggering a notice or delaying the refund until the taxpayer provides clarification.

Incorrect Transaction Values

Banks or mutual funds may report a transaction at the wrong amount. For example, a mutual fund redemption of INR 5 lakh might be reported as INR 50 lakh. The taxpayer's ITR shows the correct figure. The department's system sees a mismatch. The burden of proof shifts to the taxpayer to show the error originated with the reporting entity.

Missing or Wrong PAN Details

This is the most consequential error. If a financial institution reports a transaction under an incorrect PAN or omits the PAN entirely, the transaction is not linked to the correct taxpayer. The department may treat the unreported transaction as undisclosed income. For joint accounts, the PAN of one holder may be used for all transactions, creating attribution errors.

Why Joint Accounts Are High-Risk Zones

Sector Read-Through: Banks and Mutual Funds Face Rising Compliance Costs

The income tax department's focus on SFT accuracy has implications for the financial sector. Banks and mutual funds are the primary filers of SFT data. Recurring errors in their filings suggest weak internal controls and lack of reconciliation before submission.

Banks

Banks handle the largest volume of SFT filings, covering cash deposits, credit card payments, and foreign remittances. Errors in PAN details and duplicate reporting are more common in joint accounts. Banks with weaker reconciliation processes face higher risk of departmental scrutiny. The cost of compliance is rising as the department tightens its monitoring.

Mutual Funds

Mutual funds file SFT on a half-yearly basis for transactions in units. Incorrect transaction values and missing PAN details are the most common errors. For investors holding multiple folios, the risk of duplicate reporting increases. Fund houses with automated reconciliation systems are better positioned to avoid errors.

How Taxpayers Can Correct SFT Errors Before ITR Filing

Taxpayers should verify their AIS and TIS on the Income Tax India e-filing portal before filing their ITR. The process involves three steps:

Identify the type of mismatch – Compare the transactions in AIS with your own records. Note whether the error is a duplicate entry, wrong value, or incorrect PAN.

Prepare a reconciliation – Gather supporting documents such as bank statements, mutual fund statements, and transaction confirmations.

Raise the issue through the AIS platform – Submit your disagreement online. Retain all supporting documents to substantiate your response.

What a Disagreement Submission Does (and Doesn't Do)

The department reviews the taxpayer's feedback. If the error is confirmed, the AIS is updated. The correction does not automatically fix the underlying SFT filing. The specified entity may still have incorrect data in its records. Taxpayers should follow up with the bank or mutual fund to ensure future filings are accurate.

Next Decision Point: Filing Early Gives You Time to Resolve Mismatches

The May 31 SFT deadline does not require any action from individual taxpayers. The obligation is on specified entities. The practical consequence is that taxpayers must verify SFT data before filing their ITR. A mismatch discovered after filing is harder to resolve and may delay the refund.

Check your AIS on the e-filing portal before filing ITR

Compare reported transactions with your own records

Submit disagreements for any errors, with supporting documents

Follow up with the bank or mutual fund to correct their records

Taxpayers who file their ITR early have more time to resolve discrepancies. Waiting until the July deadline increases the risk of a notice or refund delay if the department's cross-check reveals a mismatch.

For investors with multiple financial accounts, mutual fund holdings, or joint investments, the SFT filing deadline is a reminder to verify their tax records. The errors identified by the department are not rare. They are common enough that the department issued a public advisory. The cost of ignoring them is a delayed refund or a scrutiny notice. Taxpayers should treat the AIS as a draft that needs proofreading. The department's systems are automated and do not distinguish between a genuine error and a deliberate mismatch. The burden of correction is on the taxpayer, not the reporting entity.