An Aadhaar card is not mandatory for non-resident Indians. However, a Permanent Account Number (PAN) card is. A PAN card is mandatory for NRIs when they file an income tax return (ITR) in India. While an Aadhaar card is not mandatory for NRIs, it can be used as proof of identity when opening a bank account or applying for a driving license, etc.
Income tax laws require PAN and an Aadhaar card number to be linked. But if you do not link Aadhaar with PAN, your Permanent Account Number becomes inoperative. Without an active PAN, NRIs won’t be able to do many things, including filing of ITR. PANs not linked to Aadhaar were deactivated by the Income Tax Department, affecting NRIs and Persons of Indian Origin (PIO) due to their residential status not being updated to NRI.
NRIs and Linking Aadhaar with PAN
NRIs need to proceed carefully for matters related to Aadhaar and PAN. Non-resident Indians who changed their residency status to NRI on the income tax portal are not required to link their Aadhaar and PAN cards. However, they can voluntarily link their Aadhaar and PAN cards by paying the required fee on the Income Tax portal.
To reactivate the PAN, NRIs need to submit documents to their Jurisdictional Assessing Officer (JAO) and confirm their residential status as Non-resident on the ITD website.
If NRIs do not update their residency status with the Income Tax department, their PAN may become inoperative. If PAN is marked as inoperative, you won’t receive pending refunds and the associated interest on them. Also, the Tax Deducted at Source (TDS) will need to be deducted at a higher rate as per section 206AA and even the Tax Collected at Source (TCS) will have to be collected at a higher rate as per section 206CC.
(i) NRIs and others will not be able to file a return using the inoperative PAN
(ii) Pending returns will not be processed
(iii) Pending refunds cannot be issued to inoperative PANs
(iv) Pending proceedings, as in the case of defective returns, cannot be completed once the PAN is inoperative
(v) Tax will be required to be deducted at a higher rate as PAN becomes inoperative
To make your PAN operative, you will need to contact your local Jurisdictional Assessing Officer (JAO) about your NRI status by sharing the necessary documents, such as self-attested copies of your passport, PAN card, etc.
You can send an email to your Jurisdictional Assessing Officer (JAO) explaining your change of status. You may log on to the Income Tax Department’s e-portal using your PAN and mobile number to know the contact details specific to you.
The documents required to be submitted to the JAO include a copy of PAN Card and copy of the passport showing stay confirming NRI or copy of the PIO card issued by the Government of India or copy of the Overseas Citizen of India (OCI) card issued by the Government of India or a copy of other national or citizenship identification number or taxpayer identification.
The Indian embassy, high commission, or consulate in the NRI’s location, or authorized representatives of foreign branches of scheduled banks registered in India, must certify the taxpayer identification number or citizenship identification number.
Linking Aadhaar with PAN
The income tax laws clearly say, “in case of failure to intimate the Aadhaar number, the permanent account number allotted to the person shall be deemed to be invalid”. To link Aadhaar and PAN, both registered and unregistered users can link their Aadhaar and PAN on the e-filing portal, even without logging in. You can use the tab Link Aadhaar on the e-Filing home page to link Aadhaar and PAN.
However, the Aadhaar-PAN linkage requirement does not apply to any individual who is:
Residing in the States of Assam, Jammu and Kashmir, and Meghalaya;
A non-resident as per the Income-tax Act, 1961;
Of the age of eighty years or more at any time during the previous year; or not a citizen of India.