NRI PAN-Aadhaar linking: PAN showing ‘inoperative’? Here’s what NRIs need to do

Non resident Indians or NRIs are exempt from mandatory PAN–Aadhaar linking, as long as they qualify as a non-resident under the Income-tax Act. The Income Tax Department specifically includes non-residents in the exempt category.

So, if you are an NRI and your PAN is showing as “inoperative” because Aadhaar is not linked, you generally do not need to link Aadhaar just to make the PAN operative. Instead, you should get your NRI status updated with the income tax department.

"The income department has specifically advised NRIs whose PAN is still inoperative to intimate their NRI status to their Jurisdictional Assessing Officer (JAO) along with supporting documents. These can include a copy of the PAN card and documents such as your passport showing your stay outside India, OCI/PIO card, or an overseas tax/citizenship identification document, as applicable," said Abhishek Soni, CEO & Co-founder, Tax2win.

What documents can an NRI submit?

According to the tax department, an NRI can submit a copy of the PAN card along with documents supporting their non-resident status.

• Passport showing stay confirming NRI status

• PIO card issued by the Government of India

• OCI card issued by the Government of India

• Other national or citizenship identification number or

• Taxpayer Identification Number, where applicable

Can an inoperative PAN affect an NRI’s tax refund?

An inoperative PAN can have certain consequences for taxpayers who are required to link PAN with Aadhaar, including the holding of tax refunds and interest on such refunds.

"Once your NRI/exempt status is correctly reflected, the consequences of an inoperative PAN due to non-linking should not apply to you. The Income Tax Department has also clarified that communications regarding refunds being held because of an inoperative PAN do not apply to taxpayers who are exempt from Aadhaar–PAN linking," added Soni.

For whom is Aadhaar-PAN linkage not compulsory?

• 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.

For NRIs, the important point is that the exemption applies to a person who qualifies as a non-resident under the Income-tax Act. Simply living outside India does not, by itself, determine the tax status.

What should NRIs do if their PAN is inoperative?

An NRI whose PAN is inoperative should first check whether they qualify as a non-resident under the Income-tax Act. If they do, they can intimate their NRI status to the Jurisdictional Assessing Officer with the required supporting documents.