Inoperative PAN card: I-T Dept issues clarification for NRIs, OCIs

The Income Tax Department (ITD) on Tuesday said that NRIs whose PANs are inoperative are requested to intimate their residential status to their respective Jurisdictional Assessing Officer (JAO) along with supporting documents with a request to update their residential status in the PAN database.

Non-resident Indians (NRIs) have encountered financial difficulties and were unable to file their tax returns due to their Permanent Account Number (PAN) cards becoming 'inoperative'. Despite being exempt from linking their PAN with Aadhaar, NRIs and Overseas Citizens of India (OCIs) expressed concerns about the consequences of inoperative PAN cards.

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According to Section 139AA (2), individuals who are eligible to receive an Aadhaar card must link it with their PAN cards. The deadline for PAN-Aadhaar linking was set for June 30, 2023.

Recognising the issues faced by NRIs and OCIs, the I-T Department provided a clarification through its official Twitter account. 

The tax department clarified that NRIs and OCIs who are exempt from linking their PAN with Aadhaar should not worry about the inoperability of their PAN cards.

The tax department explained that inoperative PAN cards may have resulted from other factors, such as non-filing of income tax returns (ITR) or failure to update residential status with the Jurisdictional Assessing Officer (JAO). NRIs and OCIs who fall into these categories are encouraged to contact their respective JAOs with supporting documents to update their residential status in the PAN database. The I-T Department shared a link to the JAO directory to assist individuals in locating the relevant officer.

Furthermore, the ITD emphasised that an inoperative PAN card does not render it inactive for filing income tax returns. Taxpayers can still submit their ITRs even if their PAN cards have become inoperative. However, certain consequences accompany inoperative PAN cards, including potential delays in refund processing and higher rates of tax deduction at source (TDS) and tax collection at source (TCS).

In light of the clarification, NRIs and OCIs have been urged to take the necessary steps to update their residential status with the JAO to avoid any inconveniences caused by an inoperative PAN card. By ensuring the accurate and up-to-date information in the PAN database, NRIs and OCIs can maintain a smooth tax filing process and mitigate any associated challenges.

In this context, the following clarification was given by the tax department -

1.  ITD has mapped the residential status of NRIs in case they have filed the ITR in any of the last 3 AYs or they have intimated their residential status to the Jurisdictional Assessing Officer (JAO). The PANs have been rendered inoperative, in case any one of the above-mentioned criteria is not met.

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. 

2. 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.

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

3. It is clarified that an inoperative PAN is not an inactive PAN. One may file the Income Tax Return (ITR), irrespective of PAN becoming inoperative.

Only following are the consequences of ‘inoperative’ PAN:

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.

 

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