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What should NRIs do if your PAN has become inoperative?

Posted on 21 Jul 2023
Author: Sayan Sircar

Tags: NRI ; Tax

5 mins read
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This article shows the solution in case NRIs suddenly find their PAN number has become inoperative after 30th June 2023.

What should NRIs do if your PAN has become inoperative?

This article is a part of our detailed article series on the issues tax-payers are facing due to not having PAN-Aadhaar linkage. Ensure you have read the other parts here:

Which mistakes in tax-proof submission that can make you lose your HRA exemption?

This article tells you the common mistakes to avoid while giving your HRA exemption proof to your company.

What is a hidden risk about TDS what buyers must consider before property purchase?

This article considers one risk on TDS payment due to an inoperative seller PAN card where the buyers ends up with an income tax notice to pay the remaining tax.

📚 Topics covered:

What is the news?
What are the problems that will happen if PAN becomes inoperative?
Why are NRIs affected since Aadhaar is not mandatory for them?
What should NRIs do now to make their PAN numbers operational?
What is the escalation path if your JAO is not responding to your application?
Which are the other places where NRIs must update their residential status?

What is the news?

After pushing back the deadline multiple times, the central government has started marking inoperative PAN numbers that are not linked to Aadhaar. This action was taken after the latest PAN-Aadhaar linkage deadline expired on 30th June 2023. As a result, many NRIs found out the hard way, while filing income tax return, that their PAN cards are now inoperative.

NRIs are not expected to be affected by the PAN-Aadhaar linkage deadline and, subsequently, PAN becoming inoperative since they are not expected to have Aadhaar numbers.

The NRIs PAN cards have become inoperative, i.e. cannot be used temporarily and not deactivated which could be permanent.

What are the problems that will happen if PAN becomes inoperative?

Once PAN becomes inoperative, the following issues will be seen:

Income tax filing (ITR) cannot be done
Pending refunds and interest on such refunds will not be issued to inoperative PANs
TDS will be required to be deducted at higher rates, like 20%, for inoperative PANs under section 206AA for cases like property sales, rental income, capital gains on mutual funds and NRO deposits
TCS must be collected at a higher rate (double of regular rate or 5%, whichever is higher) for inoperative PANs under section 206CC for deals like property purchase

Source: link

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Why are NRIs affected since Aadhaar is not mandatory for them?

NRIs are affected due to non-linkage of PAN and Aadhaar since they have not told the income tax authorities that they are now NRIs and, therefore

not required to have Aadhaar
not required to PAN with Aadhaar

NRIs who have been impacted here have either

not filed an ITR in the last 3 years
not informed their Jurisdictional Assessing Officer (JAO) that they are now NRIs
or belong to the OCIs/foreign citizen category who have applied for a PAN number under the resident tax-payer category

Also read
Budget 2024: A Surprise in Real Estate Sales due to Indexation Benefit Removal: Is it good or bad?

What should NRIs do now to make their PAN numbers operational?

PAN Aadhaar - locate Jurisdictional Assessing Officer

We will cover this process step-by-step:

Locate your Jurisdictional Assessing Officer (JAO): Visit the Know Your Jurisdictional Assessing Officer page to locate the contact details i.e .email address of your Jurisdictional Assessing Officer
Place and application: Along with proper documentation like passport, address proof, OCI card and related items, you should apply for your resident status to be changed to Non-Resident
Once the application is processed, the PAN will be reactivated

Alternatively, on the next trip to India, NRIs can take an online Aadhaar application, physically submit their biometrics in India and then link their new Aadhaar number with PAN to make it operational again.

What is the escalation path if your JAO is not responding to your application?

As per this tweet, taxpayers can

share their details via email at adg1.systems@incometax.gov.in & jd.systems1.1@incometax.gov.in along with a copy of the correspondence sent to JAO

Which are the other places where NRIs must update their residential status?

The standard list comprises bank accounts (NRE/NRO), demat, mutual funds etc. The complete list is here: How should an NRI handle investments and accounts in India before shifting?.

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