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Income Tax Department Issues Clarification on Inoperative PAN of NRIs/OCIs
Income Tax Dept Clarifies Inoperative PAN Status for NRIs/OCIs
Income Tax Dept Clarifies Inoperative PAN Status for NRIs/OCIs
The Income Tax Department has issued a clarification regarding the inoperation of Permanent Account Number (PAN) of Non-Residents of India (NRIs)/ Overseas Citizenship of India (OCIs). The clarification addresses concerns raised by certain NRIs and OCIs regarding the inoperative status of their PANs, despite being exempt from linking their PAN with Aadhaar. The department has provided specific guidelines for NRIs and OCIs to rectify the inoperative status of their PANs by updating their residential status with the Jurisdictional Assessing Officer (JAO) and providing supporting documentation.
Key Takeaways:
1. The Income Tax Department has clarified the inoperative status of PAN for NRIs and OCIs, providing guidelines for rectification.
2. NRIs are advised to inform their Jurisdictional Assessing Officer (JAO) about their residential status and request an update in the PAN database.
3. OCIs/foreign citizens are requested to intimate their residential status to their respective JAO along with supporting documents for updating their PAN database.
4. An inoperative PAN does not imply inactivity; individuals can still file Income Tax Returns (ITR) with an inoperative PAN.
5. Consequences of inoperative PAN include pending refunds and interest, higher TDS deduction, and higher TCS collection.
Synopsis:
Top Stories: PAN-Aadhaar Link Clarification for NRIs/OCIs
The Income Tax Department has issued a clarification regarding the inoperation of Permanent Account Numbers (PAN) for Non-Residents of India (NRIs) and Overseas Citizenship of India (OCIs). The clarification addresses concerns raised by certain NRIs and OCIs regarding the inoperative status of their PANs, despite being exempt from linking their PAN with Aadhaar. The department has provided specific guidelines for NRIs and OCIs to rectify the inoperative status of their PANs by updating their residential status with the Jurisdictional Assessing Officer (JAO) and providing supporting documentation.
Key Points
1. Residential Status Determination: The Income Tax Department has determined the residential status of NRIs based on their filing of Income Tax Returns (ITR) in the past three Assessment Years (AYs) or if they have communicated their residential status to the Jurisdictional Assessing Officer (JAO). Failure to meet these criteria renders the PANs inoperative.
2. Action for NRIs: NRIs whose PANs have become inoperative are advised to inform their respective JAO about their residential status, providing supporting documentation and requesting an update in the PAN database. The contact information for the JAO can be found at this link.
3. Action for OCIs/Foreign Citizens: The PANs of OCIs/foreign citizens, who may have applied for PAN under resident status and have not corrected/updated their residential status to the JAO or have not filed ITR in any of the last 3 A.Ys, have been rendered inoperative. They are requested to intimate their residential status to their respective JAO along with supporting documents for updating their PAN database.
4. Inoperative PAN Consequences: An inoperative PAN is not an inactive PAN. Individuals can still file Income Tax Returns (ITR) with an inoperative PAN. However, pending refunds and interest on such refunds will not be issued to inoperative PANs. Additionally, TDS will be required to be deducted at a higher rate for inoperative PANs in accordance with section 206AA, and TCS will be required to be collected at a higher rate for inoperative PANs in accordance with section 206CC. The department has also referred to the CBDT Notification No.15/2023 dated 28th March, 2023 for further details.
