PAN Inoperative? NRIs Can Still File Income Tax Returns, I-T Department Clarifies

The I-T department said concerns have been raised by certain NRIs/Overseas Citizens of India (OCIs) regarding their PANs (Permanent Account Numbers) becoming inoperative

The Income Tax (I-T) department on Tuesday clarified that non-resident Indians (NRIs) with inoperative PAN due to non-linking with Aadhaar or incorrect residential status, can still file their income tax returns. The department said concerns have been raised by certain NRIs/Overseas Citizens of India (OCIs) regarding their PANs (Permanent Account Numbers) becoming inoperative.

The I-T department said that NRIs who have not linked their permanent account numbers (PAN) with Aadhaar should provide proof of their residential status to their jurisdictional assessing officer in order to activate their PAN.

In a tweet, the department said it has mapped the residential status of NRIs in case they have filed ITR in any of the last three Assessment Years (AYs) or have intimated their residential status to the Jurisdictional Assessing Officer (JAO). The department said that PAN is inoperative for NRIs who have not updated their residential status or have not filed returns in the last three assessment years (AYs).

"The NRIs whose PANs are inoperative are requested to intimate their residential status to their respective JAO along with supporting documents with a request to update their residential status in the PAN database," it tweeted.

The PANs of OCIs/foreign citizens, who may have applied for PANs under resident status and have not corrected/updated their residential status to the JAO or have not filed ITR in any of the last three AYs, have been rendered inoperative.

"The OCIs/foreign citizens are requested to intimate their residential status to their respective JAO along with supporting documents with a request to update their residential status in the PAN database," the department said.

The Income Tax Department also clarified that an inoperative PAN should not be confused with an inactive PAN. Even if the PAN becomes inoperative, individuals can still file their Income Tax Returns (ITR). However, certain consequences arise when the PAN is inoperative. These include the non-issuance of pending refunds and interest on tax refunds, as well as higher deduction rates for Tax Deducted at Source (TDS) and Tax Collected at Source (TCS).

Under Income Tax laws, residents are required to link their PANs with Aadhaar using biometric authentication. However, non-residents are exempt from this requirement and are not obligated to obtain an Aadhaar card.

The deadline for linking PAN with Aadhaar was June 30, 2023. Starting from July 1, 2023, PAN has been deemed inoperative for individuals who failed to link it with Aadhaar. Individuals who have not linked their PAN with Aadhaar can still do so after paying a penalty.