Business Setup

Do NRIs Need PAN, TAN, and GST Registration for Business Setup in India?

Hatim Dudhiyawala
Written by Hatim Dudhiyawala
Updated on: May 7, 202618 mins Editorial Standards
Do NRIs Need PAN, TAN, and GST Registration for Business Setup

Yes, NRIs setting up a business in India need a PAN (Permanent Account Number) for tax identification and a TAN (Tax Deduction and Collection Account Number) for tax deduction at source (TDS). However, for NRIs, Goods and Services Tax (GST) registration depends on certain conditions.

Want to know what the GST registration conditions are for NRIs, and the importance of PAN, TAN, and GST registration? Read the blog and get your answers.

Key Takeaways
  • PAN, TAN, and GST registration are vital steps for business incorporation and help in smooth business operations in India.
  • PAN is mandatory for forming a business entity, filing tax returns, and opening a bank account in India.
  • TAN is needed if the business is accountable for deducting TDS on payments such as professional fees or salaries.
  • If supplying goods/ services, NRIs need to do GST registration as a non-resident taxable person (NRTP) with no tax exemption threshold.
  • For NRTPs, GST registration is temporary and valid for 90 days; however, on request, it can be extended to another 90 days.

Quick Overview of All Three Registrations at a Glance

In India, PAN, TAN, and GST registration are the most essential compliance requirements when starting a business. These three are the foundation of the legal and tax identity of your business. Considering this, before moving into each registration, look at the table below to know how the PAN, TAN, and GST registration requirements compared to resident Indians differ for NRIs. Additionally, what are the consequences that NRIs may face if they are non-compliant with these business regulations?

Permanent Account Number (PAN) Tax Deduction Account Number (TAN) Goods and Services Tax (GST) Registration
PAN is mandatory for NRIs to set up a business in India. It is required for business financial transactions. It includes filing an ITR, opening a bank account, etc. Mandatory if the business includes TDS on payments like rent, salary, or professional fees. GST registration is mandatory for NRIs if they are classified as a Non-Resident Taxable Person (NRTP). Considering this, if they are supplying goods and services in India, without a fixed business place, then they need to apply for GST.
PAN is governed by section 139A of the Income Tax Act, 1961. TAN is governed by section 203A of the Income Tax Act. GST registration is governed by Section 24, the Central Goods and Services Tax (CGST) Act 2017.
Form 94 for Indian entity and Form 96 for NRIs and foreign entity. Form 49B Form GST REG-09
Without PAN, under Section 206AA, you face 20% TDS. Additionally, financial transactions of your business get blocked. In the absence of TAN, under section 272BB, you face a penalty of INR 10,000, and your TDS returns get rejected. There is no GST registration turnover exemption for NRIs/NRTPs in India.
The fees for applying for PAN are INR 107 (delivering to an Indian address)/ INR 1017 (delivering to a foreign address) Fee for TAN is INR 65+ applicable taxes. GST registration should be done at least five days before starting your business.

This was a quick overview of PAN, TAN, and GST registration for NRIs in India. Moving ahead, let's know why PAN for NRI business setup in India is mandatory.

PAN for NRI Business: Mandatory or Optional?

PAN is a mandatory document for all NRIs engaged in any business, financial, or tax activity in India. According to section 139A of the IT Act, every individual who receives any income taxable in India, makes specified financial transactions, or is required to file an income tax return (ITR) needs to hold a PAN.

Considering this, being an NRI, if you are starting a business in India, whether as a partner in a firm, a sole proprietor, a branch office, or a director of a subsidiary, a PAN card is compulsory the moment any of the following things trigger:

  • You receive salary, rent, professional fees, dividends, interest, or any other income taxable in India.
  • You or your Indian business partner files ITR in India.
  • Your business entity has taxable transactions in the country, such as TDS deduction.
  • Your business in India is engaged in any financial transactions of more than INR 5,00,000 in a financial year with any Indian entity.
  • You open an NRE, NRO, or business bank account in India.
  • For GST registration, you also need a PAN card.
  • TDS is deducted from your Indian business payments, and for TDS returns, you need to have a business PAN card.

In simple terms, you can say that a PAN is mandatory for any business or an individual for tax compliance, return filings, and identity verification for financial dealings in India. Now, moving further, let's know when TAN is required for NRI businesses in India.

TAN for NRI Business: When is it Generally Required?

A TAN is a 10-digit alphanumeric code that is issued by the Income Tax Department under section 203A of the IT Act for entities accountable for deducting or collecting taxes at source (TDS/ TCS). Unlike PAN that you need for any financial transactions in India, TAN is function-specific. It is only required if you are responsible for TDS deduction or TDS collection.

Considering this, for NRI businesses, TAN is needed whenever the business makes payments that, under section 203A of the IT Act, attract TDS. Furthermore, let's know when an NRI business needs a TAN:

Payment Type TDS Deduction TAN Required
Salary paid to Indian employees Section 192 Yes
Payment to contractors/ sub-contractors, more than the threshold Section 194C Yes
Technical/ professional fees to residents above the threshold Section 194J Yes
Paid rent of more than INR 50,000/month to a resident Section 194IB/ 194I Yes
Payment made to an NRI for any taxable income in India, such as interest, royalties, and professional fees Section 195 Yes
Buying property from an NRI seller Section 195/ proposed changes Yes, currently TAN is required; however, from October 2026, it will be PAN-based
Dividends paid to foreign shareholders Section 195 Yes
Payment to NRI partners (interest, commission, salary) Section 194T Yes
Rent paid by the business/ NRI to the NRI landlord Section 195 Yes

*Note: Being an NRI, if you never deduct TDS, you do not need a TAN. Considering this, if you owned a business in India with no employees and no contractors. Additionally, your financial transactions do not trigger TDS, so you do not need a TAN.

For instance, a sole proprietor NRI who does everything on his own and does not have any employees, contractors, or TDS obligation does not need a TAN. However, the moment he hires a contractor, pays a salary, or his rent exceeds more than the threshold, for him TAN becomes mandatory.

So, these are the several conditions under which for NRI business, TAN becomes mandatory in India. Moving forward, let's know when NRI businesses should apply for GST registration in India.

GST Registration for NRIs: What the Indian Law Says?

GST registration for NRIs in India is governed by the Central Goods and Services Tax (CGST) Act, 2017, specifically under section 24. This section lists categories of individuals for whom GST registration is mandatory. Considering this, NRIs conducting any taxable supply in India come within this mandatory GST registration category. However, like GST for resident Indians, GST for NRIs does not get any turnover threshold tax exemption.

Further, to provide you with an idea, the table below showcases the difference between GST registration for NRIs and GST registration for resident Indians. 

Parameters Resident Indian Businesses NRI Businesses
Registration Type Regular taxable person Non-resident taxable person (NRTP)
Registration Threshold INR 40 Lakh for goods, INR 20 Lakh for services, and INR 10 Lakh for special category states NIL- there is no turnover exemption limit for NRIs.
Registration Form GST REG-01 GST REG-09 (separate form for NRIs)
When to Register Within 1 month of crossing the threshold limit. At least five days before starting a business in India.
Advance Tax Deposit Not required at registration Mandatory. The estimated GST liability should be deposited upfront.
Voluntary Registration Allowed below threshold Not applicable. It is already mandatory for the first rupee.
Composition Scheme Available 1% or 6%, flat rate, no ITC It is not available to NRTPs
Registration Validity Until cancellation 90 days (on request, it is extendable by 90 days)
Input Tax Credit (ITC) Available on business inputs Limited- only from the advance tax deposited
Return Filing GSTR-1 + GSTR-3B (monthly/ quarterly) GSTR-5 only (monthly, additionally, under this, even a nil return is also mandatory)

This was all about when GST registration for NRI businesses is mandatory in India. Moving ahead, let's know the registration requirements according to different entity types.

What are the Registration Requirements by Business Entity Type?

In India, the registration requirements for NRI businesses depend on the entity type. Considering this, to provide you with an idea, the table below showcases on which business type PAN, TAN, and GST registration are mandatory.

Business Entity Type PAN TAN GST Registration Notes
NRI Individual (Sole Proprietor) Mandatory If TDS is deducted If you have a taxable supply in India. PAN via Form 93 for an NRI Indian citizen or Form 95 for a foreign national. Additionally, GST registration as NRTP with no threshold exemption.
Indian Pvt. Ltd Company (NRI-owned) Mandatory Mandatory If turnover is more than INR 20,00,00 (goods)/ INR 40,00,000 (services) You can obtain PAN and TAN via SPICe+ at incorporation. Additionally, in the case of a company, the normal GST threshold applies, not NRTP.
Liaison Office Mandatory If deducting TDS Not required Liaison Office does not receive in India, so no GST registration is needed. PAN needed for tax filings and bank accounts. TAN is needed if you are paying a salary to the staff.
Branch Office Mandatory Mandatory Mandatory The branch office makes taxable supplies, so GST registration is mandatory. Additionally, GST registration is initially done as NRTP, and it may be converted to regular if the business is permanently established in India. PAN via Form 96 is needed for a foreign company.
LLP with NRI Partners Mandatory Mandatory If turnover is more than INR 20,00,000 LLP is an Indian entity, so the normal GST threshold applies. Additionally, during incorporation, PAN is obtained. TAN is also needed as LLP is a tax deductor for TDS on partner payments.
Foreign Company (NRTP, no India Office)

Recommended

(Rule 37BC otherwise)

 If deducting TDS If there is a taxable supply in India The NRTP regime applies. Under rule 37BC for TDS purposes, PAN can be replaced by TIN+ details. However, PAN is strongly recommended.

This was all about the PAN, TAN, and GST registration requirements for business entities in India.

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Final Thoughts

Lastly, from the above blog, it is clear that NRIs need PAN, TAN, and GST registration for business setup in India. It enables smooth business operations in India. Generally, PAN is the mandatory document that requires in all business entity types. However, TAN and GST registration depend on your business circumstances and services. Considering this, managing these requirements is vital to avoid delays and penalties.

Furthermore, being an NRI, if you are looking for business setup and tax filing assistance in India, connect with Savetaxs. We have a team of financial experts who provide you with complete guidance and simplify the whole process for you.

Glossary
  • Income Tax: Income Tax, a Type of Direct Tax, is Imposed by the Government on the Income of Individuals or Organisations.
  • Income Tax Return: Income Tax Return, Filed by Taxpayers, Contains a Formal Record of the Collected Tax by the Government.
  • TAN: Tan, Allotted to Those Who Are Liable for TDS/TCS, Claim Tax Benefits.
  • Tax Deducted at Source (TDS): The Full form of TDS is Tax Deducted at Source, which is a way to collect the income tax.
  • Input Service Distributor: A Complete Guide to Input Service Distributor Covering Its Meaning, Registration, and GST Credit Distribution Rules
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Note: This guide is for information purposes only. The views expressed in this guide are personal and do not constitute the views of Savetaxs. Savetaxs or the author will not be responsible for any direct or indirect loss incurred by the reader for taking any decision based on the information or the contents. It is advisable to consult either a CA, CS, CPA or a professional tax expert from the Savetaxs team, as they are familiar with the current regulations and help you make accurate decisions and maintain accuracy throughout the whole process.

About Author
Hatim Dudhiyawala
Hatim Dudhiyawala Certified Public Accountant (CPA)

Hatim Dudhiyawala is a Certified Public Accountant (CPA) with SaveTaxs and specializes in Indian and NRI taxation. He advises individuals, NRIs, and businesses on income tax filing, capital gains taxation, DTAA benefits, fund repatriation, and tax compliance. With experience in cross-border tax matters, Hatim helps taxpayers understand complex regulations and make informed decisions. Through his articles, he shares practical insights to help readers stay compliant and manage their tax obligations with confidence. See Full Bio

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Frequently Asked Questions

Yes, NRIs need a PAN for business setup and tax-related activities in India. Without a PAN, a business cannot start its financial operations. 

Yes, NRIs need a TAN for business setup in India if they have to deduct TDS on payments like contractor fees, salary, or rent. 

Yes, NRIs need GST registration if they supply goods or services in India, regardless of their turnover. 

Yes, an NRI or a non-resident taxable person can apply for GST registration through the GST portal.

Yes, for regular taxpayers, PAN is mandatory for GST registration, and for NRI cases, the foreign tax ID may also be used in some circumstances.