NRI’s PAN tagged as ‘Inoperative’ due to non-linking of PAN with Aadhar

If a person is eligible to obtain an Aadhar Card, it is mandatory to link it with the PAN card. Although, NRIs are not required to obtain an Aadhar and accordingly, not required to link their PAN with Aadhar, but the Income Tax Department has mandated that NRIs have to update the income tax portal on their residential status as ‘Non Residents’. With the deadline for linking PAN and Aadhar cards closed on June 30, 2023 a number of NRIs have been left with PAN cards that are now ‘inoperative’. Let’s discuss the couple of doubts in the mind of NRIs, such as whether PAN-Aadhar linking mandatory for NRIs? Can NRI file ITR without aadhar card? Why NRIs pan tagged as inoperative when Aadhar-PAN linking not required? How to make PAN ‘Operative’ from ‘Inoperative’ status by NRI? List of documents required for updating Inoperative PAN status by NRIs?

• Criteria for tagging PAN as ‘Inoperative’ for NRIs

Income Tax Department has mapped the residential status of NRIs as ‘Non Resident’ as under-

√ Filed the ITR as NRI in any of the last 3 AYs or

√ Intimated their residential status to the Jurisdictional Assessing Officer (JAO).

The PANs have been rendered ‘Inoperative’, in case any one of the above-mentioned criteria is not met.

• How to check whether PAN is ‘Inoperative’ or ‘Operative’

PAN with ‘Inoperative’ status will be getting following notification in the e-filing portal login:

‘Your PAN is made inoperative as it is not linked with your Aadhar. Some of the accesses may be limited. You can link and make your PAN operative after payment of requisite fees u/s 234H’

Further, one can check status in Form 26AS (under e-filing login): Tab ‘Current Status of PAN’

• Documents required for updating PAN status as ‘Operative’ for NRI’s:

List of supporting documents (self-attested) required for making PAN operative for NRI’s is as under:

• Copy of PAN Card; and
• Any of the following documents:

√ Copy of passport showing stay confirming NRI, or

√ Copy of Person of Indian Origin (PIO) card issued by Government of India, or

√ Copy of Overseas Citizen of India (OCI) card issued by Government of India, or

√ Copy of other national or citizenship Identification Number or Taxpayer Identification Number duly attested by:-

♦ “Apostille” (in respect of countries which are signatories to the Hague Convention of 1961) or

♦ The Indian Embassy or

♦ High Commission or

♦ Consulate in the country where the applicant is located or

♦ Authorized officials of overseas branches of Scheduled Banks registered in India.

• Documents submission to respective Jurisdictional Assessing Officer (JAO)

If any NRI’s PAN is still inoperative, he/she is requested to intimate his/her NRI status along with above supporting documents to respective jurisdictional Assessing Officer.

Further for information regarding Jurisdictional Assessing Officer (JAO), please visit e-filing home page and go to tab “know your AO” to find out your JAO. Refer following link of e-filing portal.

https://eportal.incometax.gov.in/iec/foservices/#/pre-login/knowYourAO

Above process requires OTP verification for checking jurisdiction, it can also be found ‘without OTP’ in the e-filing login in my profile option – ‘Jurisdiction details’ tab.

• Mode of application for updation of PAN status as ‘Operative’

NRIs can check Jurisdiction AO details by above process and make request either by sending documents physically or by E-mail of JAO mentioned in ‘Jurisdiction’ tab. 

• Consequences of non-linking of PAN with Aadhar–

From 1st July, 2023, the PAN of taxpayers who have failed to intimate their Aadhar, as required, shall become inoperative and the consequences during the period that PAN remains inoperative will be as follows:

• No refund shall be made against such PANs;
• Interest shall not be payable on such refund for the period during which PAN remains inoperative; and
• TDS and TCS shall be deducted /collected at higher rate, as provided in the Act. (Section 206AA and 206CC)

Note: As PAN is ‘Inoperative’, NRI might face challenge in KYC status of PAN for the Investments such as shares, mutual funds, SIPs, life insurance policies, bank accounts (NRO) etc.

• ITR can be filed without linking of PAN-Aadhar

An inoperative PAN is not an inactive PAN. One may file the Income Tax Return (ITR), irrespective of PAN becoming inoperative. It is important to note that there are multiple consequences for non-filing of ITR such as Interest, Late Fees, and Penalty etc. Thus, NRI can initiate request for making PAN inoperative as per procedure given above. As ITR can be filed with ‘Inoperative’ PAN status, you should file the return within due date.

• PAN-Aadhar linking non-mandatory for NRIs

Those persons who have been exempted from PAN-Aadhar linking will not be liable to the consequences mentioned above. This category includes:

• Residing in specified States,
• Non-resident as per the Act,
• Individual who is not a citizen of India or
• Individual of the age of eighty years or more at any time during the previous year.

However, updation of residential status as ‘Non Resident’ is must to avoid PAN tagged as ‘Inoperative’

• How to Link PAN with Aadhar

If you still wish to link the PAN with Aadhar, PAN can be made operative again in 30 days, upon intimation of Aadhar to the prescribed authority after payment of fee of Rs.1,000. PAN can be linked with Aadhar by accessing the following link:

https://eportal.incometax.gov.in/iec/foservices/#/pre-login/bl-link-aadhar

Article compiled by:

Sagar Gambhir | FCA, DISA (ICAI), DIRM (ICAI), AIII, B.COM | casagargambhir@gmail.com

Author can be reached at casagargambhir@gmail.com for any queries, issues & recommendations relating to article. Any feedback for improvement would be really appreciated.

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