NRIs can still file income tax return even if their PAN becomes inoperative

Concerns have been raised by certain NRIs/ OCIs regarding their PANs becoming inoperative, although they are exempted from linking their PAN with Aadhaar.

For many NRIs their residential status in the records of the Income Tax Department as per PAN may not have been  updated as a 'non-resident', which could have also resulted in their PANs becoming inoperative due to non-linking with Aadhaar. NRIs who do not have Aadhaar are exempted from the linking process only if they update their residential status as non-resident in the income tax portal.

The Income Tax Department on Tuesday clarified that non-resident Indians can still file income tax return even if their PAN becomes inoperative. However, the consequences of an "inoperative" PAN are:

i. Pending refunds and interest on such refunds will not be issued to inoperative PANs

ii. TDS will be required to be deducted at a higher rate for inoperative PANs in accordance with Section 206AA

iii. TCS will be required to be collected at a higher rate for inoperative PANs in accordance with Section 206CC.

The Income Tax Department also provided a clarification on why PAN cards of several Non-Resident Indians (NRI) and Overseas India Citizens (OCI) had become inoperable. The IT department had earlier made it clear that NRIs and OCI card holders did not need to link their Aadhaar card with their PANs if they do not have a Aadhaar. 

NRIs and foreign citizens whose PANs have become inoperative due to non-linking with Aadhaar should submit proof of their residential status to the jurisdictional assessing officer (JAO) for  along with supporting documents for operationalising the PAN. They should also make a request to update their residential status in the PAN database.

The details of JAO can be found at the e-filing portal – https://eportal.incometax.gov.in/iec/foservices/#/pre-login/knowYourAO

The income tax department has also  mapped the residential status of NRIs in case they have filed the ITR in any of the last three Assessment Years or they have intimated their residential status to the Jurisdictional Assessing Officer (JAO).

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 Jurisdictional Assessing Officer (JAO) or have not filed ITR in any of the last 3 AYs, have been rendered inoperative.