The last date to link PAN with Aadhaar has expired on June 30, 2023. However, not all PAN holders are required to link their PAN with Aadhaar. Certain individuals are exempted from doing it. For instance, non-resident Indians (NRIs) according to the Income-Tax Act, 1961, are exempt from linking PAN with Aadhaar if they do not have Aadhaar.
NRIs who do not have Aadhaar are exempted from the linking process provided they update their residential status as non-resident in the income tax portal. “In case the NRIs have an Aadhaar, the exemption does not apply, and they will have to link their PAN. If they miss the deadline, they can still link it by paying a penalty.”
How to update residential status of PAN
As mentioned above, NRIs are required to update the status of PAN from resident to non-resident. “NRIs whose PAN has become inoperative can file an application with the tax officer stating that linking of PAN and Aadhaar is not required for them, and also submit copies of their PAN and passport showing details of stay outside India. Based on their request, and after due diligence by the tax officer, the PAN will be made operative.”
NRI can send an email to the assessing officer for change of residential status from resident to non-resident. An NRI can also make a physical application by visiting the assessing officer. “The email address of the assessing officer can be found via the ‘Know your AO’ section on the income tax e-filing portal. The email or physical application should be accompanied with the requisite documents. Once the residential status is changed, the PAN will become operative again.”
Documents NRIs need to submit to make PAN operative
To make the PAN operative again, an NRI needs to submit certain documents along with the application. Ghosh from EY says NRIs have to attach documents such as:
- Copy of PAN Card (self-attested)
- Copy of Passport (self-attested)
- Details of stay outside India
How long does it take for residential status change of PAN
Once the jurisdictional assessing officer is satisfied with the information provided by the taxpayer, they will initiate the process of updating the status from resident to NRI. The process may take 30 days from the receipt of all information that the officer finds satisfactory. However, the time period may vary from case to case.
Read More: TAX AUDIT APPLICABILITY & PENALTIES FOR AY 2023-24
Can an NRI file ITR with inoperative PAN?
The Income Tax Department in a tweet dated July 18, 2023, has clarified that an NRI can still file income tax return even if the PAN becomes inoperative. However, the consequences of an “inoperative” PAN are:
i. Pending refunds and interest on such refunds will not be issued to inoperative PANs
ii. TDS will be required to be deducted at a higher rate for inoperative PANs in accordance with Section 206AA
iii. TCS will be required to be collected at a higher rate for inoperative PANs in accordance with Section 206CC.