For many NRIs who did not update their residential status to ‘non-resident’, their PANs have become inoperative as a consequence of not linking them with Aadhaar. This issue has raised several questions in the minds of NRIs and one such question is “can NRIs file ITR using inoperative PAN? In this blog, we will explore the concept of an inoperative PAN and its implications on NRI tax filing.
Can NRIs File ITR using Inoperative PAN?
The Income Tax Department provided clarity regarding the filing of income tax returns for Non-Resident Indians (NRIs) with inoperative PAN cards. The department stated that NRIs can still file their income tax returns, even if their PAN becomes inoperative due to reasons like non-linking with Aadhaar or incorrect residential status.
It is important to note that an inoperative PAN is not an inactive PAN. Therefore, NRIs are allowed to proceed with filing their Income Tax Returns (ITRs) regardless of their PAN’s operability status.
Deadline for ITR Filing for NRIs
The deadline for ITR filing for NRIs is the same as those for resident individuals in India. For the financial year 2022-2023 (AY 2023-2024), the deadline for filing ITR is 31 July 2023. However, NRIs should be aware of the latest updates from the Income Tax Department for any changes in deadline.
Consequences of Inoperative PAN for NRIs
While NRIs can still file their ITR using an inoperative PAN, there are certain consequences of using inoperative PAN for NRIs:
- Inoperative PANs will not receive pending refunds, including any interest on such refunds.
- In accordance with section 206AA, a higher rate of Tax Deducted at Source (TDS) will be applicable for inoperative PANs.
- Also, a higher rate of Tax Collected at Source (TCS) will be applicable.
How can NRIs Activate their PAN?
Given below are two simple steps that NRIs can follow to activate their inoperative PAN:
- Contact your Jurisdictional Assessing Officer (JAO) via mail. Request him/her to update your residential status in the PAN database and activate your PAN.
- Additionally, you need to submit supporting documents, including a copy of their PAN card and a copy of their passport indicating the duration of their residence outside India.
Note- NRIs can get the email ID of their JAO by entering their basic details like PAN and mobile number on the IT portal.
Is it Mandatory for NRIs to Link their PAN and Aadhaar?
As per the Income Tax Act, it is not compulsory for NRIs to link their PAN and Aadhaar cards. But if an NRI does not to link their PAN and Aadhaar, they must update their residential status as an NRI on the IT portal. Failure to notify the Income Tax Department about the residential status and the non-linkage of PAN and Aadhaar could lead to the PAN becoming inoperative.
Calculate your TDS Refund with SBNRI’s TDS Refund Calculator
A TDS refund is the process of reclaiming the excess tax deducted at source by the payer if the actual tax liability of the taxpayer is lower than the TDS deducted. This situation typically arises when the income tax calculated on the total income is less than the TDS already deducted. To claim a TDS refund, taxpayers need to file an income tax return (ITR). The Income Tax Department processes the ITR and verifies the details. If the tax department finds that the TDS paid is more than the actual tax liability, the excess amount is refunded to the taxpayer.
You can easily find out how much tax refund you can get by calculating your TDS Refund from this TDS Refund Calculator.
Access SBNRI’s Exclusive NRI Taxation Guide
NRIs and OCIs can now access SBNRI’s exclusive NRI Taxation Guide covering in-depth information about DTAA, Gift Tax, Rental Income Tax, ITR Filing, Types of ITR Forms for NRIs, Capital Gain Tax, Income Tax, and more. The report will help you understand India taxation on mutual funds, other asset classes and how you can comply with the regulations.
Access NRI Taxation report here
Contact SBNRI
Due to the lack of resources or right information, NRIs may sometimes find it difficult to apply for a new PAN card or correct the information in the existing PAN. We at SBNRI, understand this struggle and are here to help you out with everything. You can get in touch with our experts on WhatsApp using the button below to resolve your doubts and queries. Also visit our blog and YouTube Channel for more details.
Also read: PAN Card for NRI without Aadhaar Card – A Complete Guide
