Aadhaar-PAN Linking: A Comprehensive Guide for NRIs

Nowadays, most of the NRIs (Non-Resident Indians) face complications regarding the mandatory linking of PAN to Aadhaar. If they fail to do the same, it has caused the inoperability of PAN numbers for many NRIs, which causes hindrance in their financial transactions in India, such as investing in mutual funds, SIPs, etc. However, having Aadhaar is not compulsory for all the NRIs, but failing to link PAN and Aadhaar can make their PAN cards inoperative. 

In this guide, we have mentioned all the reasons why it is necessary to Link PAN-Aadhaar and the impacts of not doing the same. We have also provided the steps that you can follow to link your PAN and Aadhaar. Read this blog till the end to understand all the aspects regarding PAN-Aadhaar linking. 

Is PAN-Aadhaar Linking important for NRIs?

As per Section 139AA of the Income Tax Act, it is important for all individuals, including residents and NRIs, who have Aadhaar cards to link them with their PAN card before the due date given by the government. 

Although this requirement is not mandatory for the NRIs, as they are not eligible to obtain their Aadhaar number. Hence, they need to update their residential stats on the official Income Tax Portal with the help of their passport and the supporting documents regarding their past stay in India.

There will be many consequences that NRIs have to face if they fail to link their PAN and Aadhaar because it will make their PAN cards inoperative or invalid. They will not be able to file their ITRs, make transactions for investments, get refunds, open an NRO account, or request a lower TDS/TCS rate.

Effects of Inoperative or Invalid PAN for NRIs

Numerous NRIs have to face complications in making financial transactions due to their inactive PAN cards. Many NRIs who want to make mutual fund investments, sadly, couldn't proceed because of the inoperative PAN and its impacts. The NRIs with inactive PANs have to go through missing payout dividends and frozen investments as the AMFI's regulations bar new STPs, SIPs, and SWPs. 

This also affects the income tax filing, as the inactive PAN card can prevent you from claiming the refund and lower TDS certificates. It also impacts the income from property sales, rent, and NRO accounts. In short, we can say that inactive PAN cards can cause a lot of complications for individuals with NRI status, which can cause administrative hurdles and financial hardships.

The impact caused by the inoperative PAN cards: 

• The NRIs have a very important role in increasing India's economic status. Their contributions help the nation to enhance its global image. Through the inward remittance, it also strengthens the financial stability of India. The contribution of these inward remittances to the GDP of India is almost 3%. NRIs also support the foreign exchange reserves of the country by various activities like investments in bonds, shares, and mutual funds. 
• The macroeconomic stability of India can be severely affected by the disruptions caused by the inoperative PAN cards. It impacts the inflow of remittance, which eventually affects the overall financial health badly.

What Steps Should NRIs take for an Inoperative PAN? 

According to the latest news from the Income Tax Department, it has been announced that all those NRIs who have inactive PANs need to fulfil the specific requirements to correct their financial status. They also have to submit some of the additional supporting documents, which include a copy of their passport and PAN card that shows their duration and residential status. 

It is important to submit these documents because their main goal is to update the Income Tax Department with the PAN database with the correct residential information. There is a need for an intervention by the IT department and the Finance Ministry to look after all the challenges faced by all those NRIs who are living in a foreign country and still contributing to the GDP of India. These challenges were highlighted by the NRIs who faced disruptions while making their financial transactions. 

Documents Required to Make Your PAN Operative? 

Here are the documents that you will need for linking PAN to Aadhaar:

• A self-attested copy of your valid passport
• A self-attested copy of your PAN card
• Your accommodation details outside India

Steps to Link PAN and Aadhaar for NRIs

Here are the steps that you can follow for your PAN and Aadhaar linking: 

1. Visit the website of Income Tax e-filing: Go to the official website for e-filing of Income Tax. 

2. Select the option of "link aadhaar": On the homepage of the website, click on the option saying "link aadhaar".

3. Fill out your details: Provide the details such as Aadhaar number, PAN, and date of birth according to your Aadhaar card.

4. Verify it and Submit: Submit the request for PAN and Aadhaar link after ensuring that all the details match your records. There can also be a verification process by using an OTP sent to the registered mobile number. 

5. Track Status: After submitting your linking request, you can also check its status in the same section. 

Do NRIs Need to Link Aadhaar and PAN, & Why? 

The NRIs are usually not required to apply for the Aadhaar card. They can only make it if they have stayed in indian for 182 days or more in the previous 12 months. Although the NRIs have already made their Aadhaar card and their operative PAN card, it is important to link both of them to ensure tax compliance. 

It is important to have a linked PAN and Aadhaar to maintain tax compliance in India. If you fail to do so, it can even result in the deactivation of your PAN card. It will also affect your financial activities in India, such as investing in mutual funds, filing income tax returns, and you will not be able to open bank accounts.

Is it Possible for NRIs to Fill ITR with Inoperative PAN? 

The NRIs can still file their Income Tax Returns even if their PAN card are not operative. However, they have to go through some consequences that are connected to the "inoperative PAN". You can understand them from the list given below:

1. Pending Refunds: If the NRIs have an inoperative PAN, then there will be no refunds, and any accruing interests on those refunds will be provided on the filed ITRs.
2. TDS Deducted at higher rates: As per the provisions of Section 206AA, the TDS (Tax Deducted at Source) will be deducted at comparatively higher rates for all those transactions involving an inoperative PAN card.
3. TCS Collected at higher rates: As per the provisions of Section 206CC, the TCS (Tax Collected at Source) will be collected at a higher rate for all those transactions that involve an inoperative PAN card.

It is important to understand the consequences of filing tax returns without an operative PAN to avoid the potential financial implications. 

Why Choose Visament?

Linking your PAN with Aadhaar is an important step that every NRI should take to maintain tax compliance in India. You can proceed with this process online from anywhere in the world. You can also consider getting expert advice from Visament on matters of legal compliance and taxes, as one wrong move can lead to many financial complications. There are certain key points that NRIs need to remember for accurate linking. 

At Visament, we have a team of professionals with combined experience of 30+ years. You can also apply for a PAN card if you don't have one, and experts can also help you get it linked with the Aadhaar card. You can also get the other NRI-related services on our platform, specially customized for you at very affordable prices. Our experts are available 24/7 to provide customer assistance and the best experience for you.