Income Tax Department issued Clarifications on NRI PAN becoming inoperative

The Income Tax Department has issued Clarifications for PAN Holders whose PAN becoming inoperative due to non-linking of PAN with Aadhaar.

Certain NRIs/OCIs have expressed concern about their PANs becoming inoperative, despite the fact that they are exempted from connecting their PAN with Aadhaar.

In addition, PAN holders whose PANs have been inoperative because of non-linking of PAN with Aadhaar have voiced worry about certain consequences of PAN being inoperative.

In above mentioned circumstances, the following clarifications issued that may be noted:

1. ITD has mapped NRIs’ residential status if they have submitted an ITR in the recent three financial years or have informed the Jurisdictional Assessing Officer (JAO) of their residential status. If any of the aforementioned requirements is not satisfied, the PANs are deemed inoperable.

NRIs whose PANs are no longer active are asked to notify their respective JAO, along with supporting documentation, and request that their residence status be updated in the PAN database. The Details of JAO can be found at Income Tax E-filing Portal.

2. PANs of OCIs/foreign citizens who applied for PAN under resident status and have not corrected/updated their residential status to the Jurisdictional Assessing Officer (JAO) or submitted ITR in any of the recent three fiscal years have been deemed inoperative.

OCIs/foreign citizens are asked to notify their respective JAO of their residence status, along with supporting papers, and to request that their residential status be updated in the PAN database. Details of JAO can be found at Income Tax E-filing Portal.

3. It is made clear that an inoperative PAN is not the same as an inactive PAN. Regardless of whether the PAN becomes inactive, the Income Tax Return (ITR) may be filed.

Only following are the consequences of for an inoperative PAN:

i. Pending refunds and interest on such refunds will not be paid to inactive PANs.

ii. In line with Section 206AA, TDS must be deducted at a higher rate for inoperative PANs.

iii. In line with Section 206CC, TCS will be required to be collected at a higher rate for inoperative PANs.