Having a PAN card as an NRI is not an option; it is a necessity if you have any financial presence in India. This presence includes earning income, making investments, engaging in financial transactions in the Indian market, and so on.
Most NRIs are still unaware of how important this little 10-digit alphanumeric number card is. Right from investing, earning, or owning a property in India, a PAN is a non-negotiable document, and not having one only brings extra taxes, legal trouble, and difficulties.
In this blog, we will explore why having a PAN card as an NRI is essential even if you are not paying taxes in India.
Key Takeaways
- A PAN card for NRIs is not mandatory; however, it becomes mandatory in certain circumstances.
- Such circumstances include having taxable income in India, filing ITR, making investments in India, conducting banking and financial transactions, and more.
- NRIs cannot hold more than one PAN card, as doing so is punishable as per the indian taxation law.
- During NRI PAN card application, Indian citizens living abroad must use Form 49A. Form 49AA is for individuals who are not Indian citizens.
- PAN card (Permanent Account Number) simplifies TDS (tax deduction at source) claims and refunds for NRIs.
Reasons Why NRIs Need A PAN Card Even Without Paying Taxes
Apart from filing NRI Income tax, the PAN Card is used for the following reasons:
Selling or buying of property in India
NRIs need a PAN card if the property transaction exceeds Rs 10 lakh. However, many property dealers will ask for your PAN Card, regardless of the property transaction limit.
Opening An NRE/NRO Bank Account
Although NRIs do not always need a PAN card to open an NRE or NRO bank account, conducting large financial transactions through these accounts typically requires your PAN card.
For Making Any Investment
As an NRI, if you want to invest in Indian mutual funds, stocks, or other securities, you need a PAN card. Many brokers will not even open a trading or Demat account for you without the PAN.
Repatriation Of Funds
For non-resident Indians, in many cases, repatriating sale proceeds or income from India to the country of residence requires a PAN card. It is required to validate the source and legality of funds.
Partnership Roles or Corporate
As an NRI, if you are acting as a partner or director in any Indian company or LLP, having a PAN number is legally required and mandated.
To Start A Business In India
For NRIs who wish to set up a company in India, a PAN card is a mandatory document for business registration, compliance, and tax filings.
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Consequences of Not Having A PAN Card Or Holding More Than One NRI PAN Card
The Income Tax Act permits an individual, whether an Indian resident or NRI, to hold only one PAN. Hence, if a person holds more than one NRI PAN, they will be liable to a penalty of INR 10,000 under Section 272B of the IT Act.
In a scenario where you are inadvertently allotted more than one PAN card, it is advisable to legally surrender the additional PAN to stay compliant with the Indian taxation law.
Consequences of Not Having a PAN Card.
Not having a PAN number causes a range of problems, such as:
- You cannot file taxes or claim tax refunds in India.
- You will be liable to higher taxation rates.
- You cannot invest in mutual funds or even open a trading or demat account.
- Banks will reject high-value transactions.
- You will be imposed with penalties and delays in property sales.
How To Apply PAN Card NRI
The NRI PAN Card Application has now been simplified and is fully digital. To apply for an NRI PAN, you can use either UTI Infrastructure Technology and Services Limited (UTIITSL) or Protean (formerly NSDL e-Governance Infrastructure Limited).
- Now visit any of the websites and select the option "New PAN for Indian Citizens (Form 49A)".
- Fill in the application form with your name, birth date, address, contact number, email, and other asked PAN Card details. Additionally, select the applicant category as "Individual" and the application status as "Non-resident Indian".
- Upload all the required documents. Please ensure the documents are clear and legible.
- Pay the fees using either a credit, debit card, UPI, or net banking.
- Cross-check all the PAN Card details once again, submit the form, and note the acknowledgment number upon submission. You must use this acknowledgment number to track your application's status on the website.
- Print the acknowledgment receipt and sign it. Along with those, attach two recent passport-sized photos.
- Now, within the time frame of 15 days of your e-submission, forward the signed acknowledgment receipt and the original documents (or the copy of documents authenticated by the Indian consulate or embassy) to the Protean or UTIITSL office. The addresses of the offices are available on their respective websites. Over the envelope, please ensure to mention "PAN application - Acknowledgment Number".
- Lastly, wait for your PAN card to be dispatched to your address.
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How Savetaxs Can Help With NRIs With PAN Card Service
Our experts at Savetaxs bring more than 30 years of combined experience to help NRIs manage a wide range of financial problems in India and across borders. Our team has experienced CAs and CPAs who understand cross-border taxation and financial issues.
With a decade and counting of experience, we strive to help every NRI with its tax and compliance issues.
From NRI new PAN Card applications to PAN citizenship updates, PAN reprints, PAN corrections, Aadhaar exemption filings, and Personal CA support, SaveTaxs helps you with everything you could have ever imagined.
NRIs, your PAN card is more than just a piece of plastic. It is your financial identity in India; it's the key that opens the door to financial freedom. So do not let the paperwork hold you back; connect with us today, as Savetaxs serves its clients 24/7 across all time zones.
**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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