Time and again, NRIs all around the globe have encountered this doubt: “Do I need a PAN Card if I am an NRI?”. PAN (Permanent Account Number) Card is a unique alphanumeric code allotted by the Income Tax Department of India as an identification code. The allotment of PAN Cards is done under the supervision of the Central Board of Direct Taxes. There are multiple usages of the PAN Card for NRI and in this article, we will explore these usages, the paperless process of application (completely online) and documentation requirements for PAN.
Why an NRI needs a PAN Card?
A PAN Card has multiple usages. Let’s point them out for you:
- Opening NRI Bank Accounts [NRE, NRO & FCNR (B)]
- Filing Income Tax Return
- Investment in the Indian Market (Shares, Mutual Funds, Real Estate etc.)
- Identity Proof
Process of Application of PAN Card for NRI
You can find the process of applying for a new PAN Card above. The process is briefly divided into 2 parts. If you have an Aadhar Card, it is an effortless process to obtain a PAN Card. The entire process would take just 10 minutes.
Applicants who don’t have an Aadhar Card can fill either of the forms: 49A (for citizens of India) or 49AA (for foreign citizens) and carry forward with the paperless process online. The PAN Card will be delivered to the registered address with the applicable fee, which you can pay online while filling the form.
A quick recap: Fees for delivery of PAN Card based on the communication address registered by the NRI are as follows:
- Indian Address: Rs.101/-
- Foreign Address: Rs.1,011/-
- e-PAN Card: Rs.66/-
Note: The above mentioned rates are for paperless applications.
Contact Details of PAN Office in India
- Telephone no.: 020-27218080
- FAX: 020-27218081
- Email: [email protected]
Importance of PAN Card
NRI Bank Accounts comprise of NRE, NRO and FCNR(B) Accounts. In order to understand the importance of PAN Cards w.r.t NRI Banking, we need to explore these 3 accounts in brief keeping in mind how PAN Cards will come into play.
- NRE: NRE Accounts are maintained for funds earned outside India with both Principal and Interest earned being tax-free. Therefore, NRIs can opt for Form 60, which is a substitute for PAN for opening an NRE Account.
- NRO: NRO Accounts are maintained for the funds generated in India which are mostly liable to taxes. Income such as rent or pension where, in most cases, taxes are not deducted at source are deposited in an NRO Account. Therefore, a PAN Card is mandatory for NRO Accounts as it involves filing a tax return.
- FCNR (B): FCNR (B) Accounts are maintained for foreign currency term deposits from outside India. Again, the principal and interest are tax-free, so usage of a PAN Card is not mandatory and can be substituted with Form 60.
In summary, a PAN card is not mandatory if you want to open a NRI Bank Account or book NRI FD in India. But for other interests such as carrying out investments in Indian Market in asset classes such as Mutual Funds, Real Estate, Stocks, PMS etc., a PAN Card is mandatory. It is also a mandatory document if you are filing an income tax return in India. Let’s get a clearer image on this doubt in the next segment.
The evergreen NRI Doubt: Is PAN Card Mandatory?
No! A Pan Card is not a mandatory document for opening an NRI account. The basic use of a PAN Card can be associated with taxes. A PAN Card is a mandatory document to file taxes and carry on investments from these Accounts. In the absence of the Pan Card, NRIs can sign Form 60 [Form 60 is a declaration to be filed by an individual or a person (not being a company or firm) who does not have a Permanent Account Number (PAN) and who in involved in any transaction] to open an NRI Account.
The basic difference between a PAN Card and Form 60 is that you can only sign and use the Form 60 to open a bank account but in order to file taxes and carry out investments from that account, a Pan Card is mandatory.
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A PAN is mandatory when filing Income-Tax return, TDS or any transaction that attracts tax. PAN works completely the same way for both NRI and Resident Indian except for one factor – the type of Application Form alone changes with respect to your current Residential Status.
Yes. You can apply for a PAN Card from the USA. The easiest and convenient way to apply for a PAN card from the USA is online. Watch the video to know about the process in detail.
If you have an Aadhar Card:
-Download your PAN Card in pdf format from the income tax website in just 10 minutes by verifying details and OTP
If you don’t have an Aadhar Card:
(Form 49A: For Citizens of India) or (Form 49AA: For Non-Citizens)
-Submit your details on NSDL
-Upload the documents through paperless modes (e-KYC & e-Sign / e-Sign scanned based / DSC scanned based)
-Wait for the card to be processed
-Get your PAN Card delivered to your registered address and email (e-PAN)
An NRI needs a PAN Card if that NRI has got a taxable income in India. According to the new- rule of SEBI, any NRI not having PAN Card cannot do the share trading by depository or broker. PAN Card is also mandatory for an NRI if the NRI would like to invest in Mutual Funds.
People who hold Indian citizenship and settled abroad should use the Form 49A available for Indian citizens. Whereas NRIs who hold foreign citizenship, such as OCI holders or people of Indian origin who possess foreign citizenship or foreigners who are not of Indian origin are required to fill Form 49AA.
NRIs need a PAN card because they will be required to file income tax returns if they have rented out the property. Besides, if the property is sold later, the capital gains resulting from the sales would be subject to capital gains tax. Capital gains would be included in the total income while it is being taxed.