For Indian citizens, having a PAN card is a requisite for conducting various financial operations, including opening a bank account and making investments. This 10-digit identification document allows the Income Tax Department to monitor financial transactions, making it relatively simple to assess the tax liabilities of individuals and organisations.
However, if you do not currently live in India, should you apply for a PAN card? Let us understand the regulations, the importance of PAN cards for NRIs, and how to apply for a PAN card.
Also read: Download and print UAN card
Is a PAN card mandatory for NRIs
A PAN card is not mandatory for Non-Resident Indians (NRIs) who do not derive any income from India. However, if NRIs have income sources like rent, dividends from stocks, capital gains from selling property, or other investments in India, a PAN card becomes necessary for filing taxes. The exception to this rule is when the NRI owns agricultural lands. The income derived from agricultural properties is exempt from tax, subject to the location of such properties in a rural area.
Although a PAN card is not mandatory, it would be useful for every NRI to hold this key identification document, which can come in handy when the NRI wishes to invest in India in the future.
Is a PAN card mandatory for NRO account/NRE account
To open a Non-Resident External (NRE) account, an NRI can submit their PAN copy if they have one or declare a Form 60 in the absence of a PAN card. Form 60 will include personal details of the NRI, such as name, date of birth, address, and reasons for not holding a PAN card.
Documents required to apply for a PAN card for NRIs
You must keep the following documents handy while applying for a PAN card.
- 2 recent passport-size photographs
- Passport copy
- Copy of your PIO/OCI card
- Overseas address proof
- If you already have an NRE account, then a copy of the statement for transactions made within the last 6 months duly verified by concerned authorities
Also read: How to get your PRAN card
How can an NRI apply for a new PAN card online
PAN card for NRIs can be applied online by filling out Form 49AA on either of the two portals authorised by the Indian government to issue PAN cards on behalf of the Income Tax Department. These include Protean, formerly the National Securities Depository Limited (TIN-NSDL) and the UTI Infrastructure Technology and Services Limited (UTIITSL).
The application process is as follows:
Step 1: Fill in the application with your personal details. Select the “Individual” applicant category and status as “Non-Resident Indian.”
Step 2: Upload the scanned documents (ID and address proof, photograph, and age proof), which should be clear and legible to avoid the risk of rejection.
Step 3: Make the payment for the application. It can be done using credit/debit cards, net banking, or UPI payment methods.
Step 4: Submit the application.
Step 5: Write down the acknowledgement number. This is key as it will help you track the status of the PAN card application.
Step 6: Print the acknowledgement receipt, sign it, and paste 2 passport-size photographs (recent ones) on it.
Step 7: Within 15 days of submitting the online application, send the signed acknowledgement receipt and the original documents to the UTIITSL or Protean office. Instead of original documents, you can also send copies of the documents that are authenticated by an Indian embassy or consulate. On the envelope, write "Application for PAN - Acknowledgement Number”.
Also read: Tax evasion
The all-digital PAN application process
Alternatively, NRIs can choose the paperless online PAN application facility. This enables applicants to upload scanned images of documents and digitally sign the application online. This application relies on eSign (Aadhaar-based e-signature) and Digital Signature Certificate (DSC). No physical documents are required to be sent by the PAN applicants for eSign and DSC-based PAN applications.
e-PAN card vs physical PAN card
Whichever mode of application you choose, if you don not need a physical PAN card, you can opt for an e-PAN card, which will be dispatched to the email ID specified on the PAN application form. This will cost the NRI less than Rs. 100.
Again, irrespective of the mode of application, you can opt for a physical PAN card. The cost is slightly more than Rs. 100 (Rs. 107 including GST) if the NRI has provided an Indian address for delivery and exceeds Rs. 994 if the applicant has provided a foreign address for delivery.
Is Aadhaar-PAN linking a requirement for NRIs
NRIs should link their Aadhaar to their PAN cards. However, if the NRI is no longer a citizen of India and has not obtained or applied for an Aadhaar card in India, the person is exempted from the linking process.
What should you know about inoperative PAN cards
Overseas citizens of India (OCIs) or foreign citizens who have applied for a PAN card under resident status:
- Should provide updates of their residential status to the Jurisdictional Assessing Officer (JAO).
- Should have filed income tax returns in any of the past 3 assessment years.
If either condition is not met, their PAN cards will be rendered inoperative. The setbacks of an inoperative PAN include:
- A pause in the issue of pending refunds or interest on such refunds to the holders of inoperative PAN cards.
- TDS (Tax Deducted at Source) for inoperative PANs will be at a higher rate, according to section 206AA.
- TCS (Tax collected by sellers when they sell to the buyers) for inoperative PAN will also be at a higher rate, according to section 206CC.
However, income tax returns can still be filed by inoperative PAN card holders. The PAN is still active despite being rendered inoperative.
Conclusion
If you want to invest in mutual funds or stocks, open NRE/NRO accounts, buy or sell property over Rs. 10 lakh or earn more than Rs. 2.5 lakh in India, you would require a PAN card for tax filing purposes. PAN cards for NRIs can be applied online in just a few simple steps, and you can even link your PAN card with your Aadhaar card easily.
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