A PAN card for NRI is required for all financial transactions, investments, and filing income tax returns in India, while an Aadhaar for NRI helps to prove your identity and simplify KYC.
A PAN (Permanent Account Number) is a unique 10-digit alphanumeric identification number issued by the Indian IT Department. It serves to track your financial activities in India. On the other hand, an Aadhaar card is a 12-digit unique number that is issued by the UIDAI (Unique Identification Authority of India). It is optional for an NRI to have an Aadhaar card. In this blog, we will learn more about why an NRI needs a PAN and an Aadhaar card.
Key Takeaways
- An NRI needs a PAN card to conduct all financial transactions in India. It is also required to file ITR in India.
- An Aadhaar for NRI is required to provide your identity, seek employment in government sectors, or for KYC. However, an NRI doesn't necessarily need to have one.
- An NRI can voluntarily link their Aadhaar card and PAN card by paying the specified fee on the Income Tax Portal.
Why Does an Aadhaar Card Matter for NRIs?
For NRIs, having an Aadhaar card is optional. However, it's advised to have one as it is widely accepted as proof of identity, address, and date of birth. Here are a few reasons why an Aadhaar card matters for NRIs:
- An Aadhaar card is required for income tax e-filing in India under Section 139AA of the Income Tax Act of 1961.
- It is required to avail of the benefits of all government-subsidized and social welfare schemes in India.
- An Aadhaar for NRI may be required to seek employment in India, particularly in the government sector.
- The card is essential for conducting KYC procedures, which is important to carry out online financial transactions in India.
Why PAN Card Matters for NRIs?
An NRI might not reside in India, but if you have financial links here. Then, a PAN card for NRI in India becomes essential. Here are a few reasons why the PAN card matters for NRIs:
- The banks will need your PAN card to verify your tax identity for opening an NRE (Non-Resident External) or NRO (Non-Resident Ordinary) account.
- The Securities and Exchange Board of India (SEBI) mandates PAN for investing in mutual funds, stocks, or fixed deposits.
- An NRI needs a PAN to claim refunds easily; without one, you will face higher TDS rates.
- If you receive rent or dividends from India, you need to file an ITR. To do the same, you will need a PAN card.
- A PAN (Permanent Account Number ) card is essential for buying or selling an immovable property in India when the transaction value exceeds Rs. 10 lakhs.
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What are the Differences Between an Aadhaar and a PAN for NRIs?
The main difference between a PAN card and an Aadhaar card for NRIs is that a PAN is mandatory for all financial and tax-related activities in India. In contrast, an Aadhaar card is generally optional. Consider the table below to understand the differences between a PAN card and an Aadhaar card for NRIs:
| Purpose |
PAN (Permanent Account Number) |
Aadhaar |
| Proof of Identification |
No |
Yes |
| Used for Tax Filing |
Mandatory |
Not required |
| Bank KYC |
Required |
Useful |
| Mobile/Utility KYC |
Not Needed |
Useful |
| Property Purchase |
Mandatory |
Helpful |
| Investments |
Mandatory |
Not required |
Do NRIs Need to Link Aadhaar Card and PAN Card?
NRIs who have updated their residency status to NRI through the income tax portal don't need to link their Aadhaar cards and PAN cards. You can link your Aadhaar and PAN cards voluntarily by paying the required fee on the Income Tax Portal.
Keep in mind that if you don't update your residency status with the Income Tax department, your PAN card may become inoperative.
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To Conclude
For an NRI, having a PAN card and an Aadhaar card can help you carry out seamless financial and banking transactions in India. If you have income sources in India or wish to invest in the country, you must have a PAN card. It is also required for filing ITR in India. An Aadhaar card is widely accepted as proof of identity. However, having one is not mandatory for NRIs.
Furthermore, if you need more assistance with a PAN card or an Aadhaar card for NRIs, contact Savetaxs. We at Savetaxs have a team of experts who help NRIs manage their financial planning and tax obligations in India. Our experts bring more than 30 years of expereince to ensure you get the best-quality service. Contact us right away, and get the best guidance and assistance from the industry's top experts.
Note: This guide is for informational 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.
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