ONLINE PAN VERIFICATION IN FINACLE CBS: NEW VALIDATIONS, 20 PERCENT TDS SLABS, AND AGENT RELIEF

    The Department of Posts, Financial Services (FS) Division, has introduced major system upgrades to the Finacle Core Banking Solution (CBS) regarding online PAN validation, higher Tax Deducted at Source (TDS) slabs for inoperative PANs, and relief on commission TDS for small savings agents.

    Notified via Letter No. CBS-25/3/2024-FS-DOP dated 12 November 2026 in continuation of SB Order No. 02/2024, these enhancements integrate direct real-time checks with Protean (formerly NSDL) records.

    Here is a complete breakdown of the new Finacle CBS rules, tax codes, exemptions, and upcoming compliance deadlines for customers, agents, and post office staff.

1. MANDATORY FOUR-POINT PAN VALIDATION IN FINACLE

Whenever a PAN is linked during Customer Information File (CIF) creation or modification (CCRC, CMRC, ECMRC), Finacle now validates four distinct parameters directly against NSDL/Protean records:

- PAN Status (must be Existing and Valid)

- Name Match Status (must match CIF Name)

- Date of Birth Match Status (must match CIF DOB)

- Aadhaar-PAN Linkage Status (Operative or Inoperative)

Strict Blocking on Name or DOB Mismatch:

CIF creation or modification is now strictly blocked by the system if the Name or Date of Birth entered does not match the NSDL database. The validation button in Finacle will only disable once all four checks return positive responses.

2. HANDLING INOPERATIVE PANs AND NEW 20 PERCENT TDS CODES

If a customer's PAN is valid and both Name and Date of Birth match, but the PAN is Inoperative because Aadhaar is not linked, CIF creation or modification is permitted—subject to a higher 20 percent TDS deduction under Income Tax rules.

To automate this, two new CIF-level tax codes have been introduced alongside regular codes (TDSNR and TDSNS):

- TDSIO: Applies 20 percent TDS for customers below 60 years of age with an inoperative PAN.

- TDSIS: Applies 20 percent TDS for senior citizens aged 60 to 80 years with an inoperative PAN.

Automated Age-Based Batch Updates:

Finacle runs an automated batch job to transition tax codes as customers cross age milestones:

- On attaining 60 years: Automatically shifts from TDSIO to TDSIS.

- On attaining 80 years: Automatically shifts from TDSIS to regular senior citizen code TDSNS.

3. EXEMPTIONS FOR SUPER SENIOR CITIZENS AND SPECIFIC STATES

Inoperative PAN penalties do not apply universally. Finacle enforces automatic relaxations based on age and residential PIN code:

- Super Senior Citizens (Above 80 Years): Aadhaar-PAN linkage is not mandatory. Customers above 80 years continue under regular tax code TDSNS without higher TDS deductions.

- Exempted States (Assam, Jammu and Kashmir, and Meghalaya): Based on the PIN code recorded in the customer's CIF address, residents of these three states are exempt from mandatory Aadhaar-PAN linking. Regular tax codes (TDSNR or TDSNS) apply even if the linkage status shows as inoperative.

4. TDS RELIEF FOR MPKBY AND SAS AGENTS

Under Section 393(1) of the Income Tax Act 2025 (corresponding to erstwhile Section 194H of the Income Tax Act 1961), TDS is applicable on agent commissions only when aggregate commission exceeds Rs. 20,000 in a financial year.

Previously, lack of system automation caused unintended deductions for smaller earners. With the new Finacle patch deployed, no TDS will be deducted from commission paid to Mahila Pradhan Kshetriya Bachat Yojana (MPKBY) and Standardised Agency System (SAS) agents if their total commission income during the financial year does not exceed Rs. 20,000.

5. CRITICAL ACTION TIMELINE FOR SCSS CUSTOMERS AND AGENTS

To prevent customers and agents from facing unexpected 20 percent TDS deductions during the upcoming quarterly interest run, the Department has set strict action dates:

- Automated SMS Alerts: Periodic SMS reminders are being sent to Senior Citizen Savings Scheme (SCSS) account holders and SAS/MPKBY agents whose PANs are flagged as inoperative.

- Data Sharing (By 16 November 2026): CPRC Chennai will distribute circle-wise lists of affected SCSS customers and agents to all Postal Circles.

- Customer Compliance Window (By 15 December 2026): Affected individuals must link their Aadhaar with PAN, visit their home Post Office for online PAN re-validation, and submit Form 121 (wherever applicable).

- Next Interest Run Date (31 December 2026): Completing re-validation by mid-December ensures records are updated well ahead of the December 31 interest payout.

6. UPDATED EPAN DETAILED REPORT FOR POST OFFICES

For daily monitoring and audit verification, the EPAN Detailed Report in Finacle has been upgraded to display three additional columns:

- NSDL Name Match Status

- NSDL DOB Match Status

- NSDL Aadhaar Seeding Status

Post office counter staff and supervisors should verify these statuses during daily CIF operations and actively guide walk-in SCSS depositors and agents to complete Aadhaar-PAN linking before December 15, 2026.