The below content is purely for informational purposes and is not intended to constitute advisory of any kind. Please note, these are in-depth articles which are best viewed on large screen devices like laptops, desktops and tablets. The position reflected in this article has been updated as of February 15, 2024.

As a Non-Resident Indian (NRI), you may sometimes question the necessity of having a Permanent Account Number (PAN) card and an Aadhaar card. Managing finances in India often involves the submission of key documents including a PAN card and an Aadhaar card. While a PAN card is essential for tax filing in India, an Aadhaar card is used to comply with Know Your Customer (KYC) regulations and procedures. This article details how having a PAN card and an Aadhaar card can be beneficial for NRIs.

Benefits of PAN card for NRIs

PAN is a unique, 10-digit alphanumeric identification number issued by the Income Tax (IT) Department of India. It serves the purpose of tracking your financial activities in India. If you earn income, invest, or engage in financial transactions within India, then having a PAN card can help you significantly.

As per the prevailing Indian IT regulations, an NRI requires a PAN card for the following situations:

• File Income Tax Return (ITR) in India;
• Open a bank accounts, including NRI bank accounts and NRI demat accounts;
• Invest in mutual funds, debentures, or bonds exceeding ₹50,000;
• Buy gold worth more than ₹2 lakh;
• Purchase/sell an immovable property exceeding ₹10 lakh;
• Deposit of cash exceeding ₹50,000 in any one day with a bank;
• Deposit/withdrawal of cash exceeding ₹20 lakh in a Financial Year (April-March) with a bank.

Benefits of Aadhaar card for NRIs

An Aadhaar card is issued by the Unique Identification Authority of India (UIDAI). It is a 12-digit unique number that serves as a proof of identity and address. As an NRI, while having an Aadhaar card is optional, it is widely accepted as a proof of identity, address and date of birth. An Aadhaar card is commonly used by NRIs for:

• Opening NRI bank accounts;

• Re-KYC/activation of your dormant accounts;

• Buying/selling a property;

• Filing ITR.

How to apply for an Aadhaar card as an NRI

As an NRI, you can book your Aadhaar card appointment via the UIDAI website or through your nearest Aadhaar Seva Kendra. You will need to provide your Indian passport that will serve as a proof of identity, address and NRI status. As per the latest UIDAI guidelines, along with the requisite documentation, you also have to submit a completed Aadhaar enrolment or update form.

To know more, you may visit the UIDAI website.

NRI children who are minors (with valid Indian passports) are also eligible to obtain an Aadhaar card. As per the UIDAI guidelines, it is mandatory to also provide a documented proof of age. In case of children born after October 1st 2023, a birth certificate is compulsory.

Linking Aadhaar card and PAN card

Non-residents who have updated their residency status to NRI on the income tax portal, do not need to link their Aadhaar and PAN cards. NRIs can voluntarily link their Aadhaar and PAN cards by paying the specified fee on the Income Tax portal.

It is important to note that if you do not update your residency status with the Income Tax department, your PAN may get inoperative.

Here's what happens when your PAN is marked as inoperative:

• You won't receive pending refunds and the associated interest on them.
• Tax Deducted at Source (TDS) will need to be deducted at a higher rate as per section 206AA.
• Tax Collected at Source (TCS) will have to be collected at a higher rate as per section 206CC.

To make your PAN operative, please inform your local Jurisdictional Assessing Officer (JAO) about your NRI status by sharing the necessary documents (such as self-attested copies of passport, PAN card, etc.). As an NRI, if you voluntarily want to link your Aadhaar card and PAN card, then you have to pay a specified fee.