Linking of PAN and Aadhaar for Non Resident Indians

PAN (Permanent Account Number) and Aadhaar are two key identification numbers issued to Indian citizens by the Indian government.

• PAN is a ten-digit alphanumeric number, issued in the form of a laminated card by the Income Tax Department. It is required for filing income tax returns and for financial transactions above a certain limit.
• Aadhaar is a 12-digit unique identification number issued by the Unique Identification Authority of India (UIDAI) to Indian residents. Aadhaar serves as a proof of identity and address across the country.

What is PAN Aadhar Linking?

Linking PAN with Aadhaar has become a mandate as per provisions of Section 139 AA of the Income Tax Act 1961.

Linking Aadhaar with PAN has made it possible for the Indian government to streamline and authenticate their database of taxpayers more effectively.

Aadhaar numbers are unique to everyone, as they are based on the biometric data, specifically fingerprints and iris scans of the holder. This feature of Aadhaar makes duplication or fraudulent representation nearly impossible.

By connecting Aadhaar with the PAN database, the government has enabled a robust system of de-duplication. It ensures that a single individual cannot hold multiple PAN cards under different identities, a loophole that was often exploited for tax evasion and other illicit financial activities.

Through this linking, the Income Tax Department can efficiently cross-verify the identity of an individual, enhancing the integrity and transparency of financial transactions and tax administration in the country.

What will Happen if Aadhar and PAN are not Linked?

The deadline for Aadhar to PAN link was that of 30^th June 2023. If the PAN isn't linked with Aadhaar, it becomes inoperative, leading to various repercussions under the Income Tax Act.

Non-compliance may restrict the issuance of refunds and interest on Income Tax Refunds. In addition, higher tax deductions or collections may be applicable due to the inoperative status of PAN.

Who is Not Required to Link PAN with Aadhaar?

While the linking of PAN and Aadhaar is mandatory for most individuals, there are specific groups exempted:

Individuals aged eighty and above: People who are eighty years old or more are exempt from the requirement of linking PAN with Aadhaar. This exemption is made considering their age and the associated difficulties they may face in complying with this mandate.

Non-Residents: Non-Resident Indians (NRIs), as defined by the Income Tax Act, are not required to link their PAN with Aadhaar. This is because, as per the existing regulations, the requirement to obtain Aadhaar and link it with PAN is applicable only to residents of India.

Non-citizens of India: Individuals who are not citizens of India are exempt from this rule. While foreign nationals can apply for and hold a PAN card for financial and tax-related activities in India, they are not eligible to obtain an Aadhaar card, which is only issued to residents of India.

Status of Pan-Aadhaar Link for NRIs

On July 10, responding to a flurry of inquiries from NRIs, the Income Tax Department of India provided some much-needed clarification on PAN Aadhar link status for NRs. It stated that NRIs who have informed the department about their NRI status need not worry; their PANs remain active and functional.

The department made an appeal via Twitter to those who hadn’t yet disclosed their NRI status. They urged these individuals to get in touch with their Jurisdictional Assessing Officer (JAO) online. By providing supporting documents – a copy of their PAN card and a copy of their passport showing their period of residence outside India – their status can be updated in the PAN database.

How Can NRIs Activate Their PAN?

If you're an NRI whose PAN has turned inoperative, there's a simple process to update your status and reactivate your PAN. All you need to do is submit certain documents to the department - a copy of your PAN card, and a copy of your passport showing the duration of your stay outside India. Once the department has updated your status in the PAN database, you can then inform your Assessing Officer (AO) about the change. This will help re-activate your PAN, bypassing the need for NRI PAN Aadhar Linking.

However, there's also another way for NRIs wishing to maintain their India address. They can opt to secure an Aadhaar number and then proceed with the standard process to link their PAN with Aadhaar.

Conclusion

So, for all the NRIs out there, don't let the PAN-Aadhaar linking process unnerve you. There are straightforward solutions available to ensure your PAN stays active and ready for use. Don't hesitate to contact the Income Tax Department and get your PAN status updated as per your current residence status.

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