PAN Card India Foreign Citizen Problems: Dos and Don’ts

by Whytecroft Ford | Jul 24, 2023 | Indian Law, Indian Law Weekly Round-Up, NRI Legal Services, OCI, PAN, Power of Attorney

In this article, we look at key problems for PAN Card India when applying or when you need to update your existing PAN. Subsequently, what you should and shouldn’t do if you fall into either category.

Before we begin, here is a brief recap on PAN and how to apply from outside of India. If you don’t already hold a PAN and have financial activities in India then you should consider obtaining your PAN as soon as possible. Don’t forget it can take between 5-8 days to apply depending on how quickly you gather your requirements. Adding to this another 10-20 days to actually receive your PAN from abroad. That too, provided your application meets the mandatory guidelines.

Let’s first recap on what a PAN actually is below.

What is a PAN & Can I apply from outside of India?

The PAN system of identification is a computer-based system that assigns a unique identification number to every Indian national, NRI and Foreign Citizen of India. Through this method, Indian financial-related information for a person is recorded against a single PAN number which acts as the primary key in a number of official requirements, such as opening a new NRO account. Your single number is valid across the country and hence no two people or tax paying entities can have the same PAN.

A similar example to the PAN would be the UK national insurance number. Both systems have a similar overall purpose although different applicability country to country.

The PAN Card is not only issued to individuals. Companies and partnership firms can also avail a PAN Card and it becomes mandatory for such entities to have a PAN number when they are filing their income tax returns in India. Even in the case of individuals, minors, students and Foreign Citizens, OCI, Non-Resident Indians (NRIs) can also apply for a PAN Card.

PAN Card India Foreign Citizen Problems Dos and Don'ts — PAN Card India Foreign Citizen Problems Dos and Don’ts

Do’s & Don’ts for PAN Card India

During 2023, individuals have faced numerous issues when applying for PAN. These include using the incorrect application form and not providing sufficient supporting documents. NRI’s, on the other hand, have been left bewildered by the requirements to link Aadhar-PAN. To add further complexity, the release of information has been delayed, leaving people in a state of not being sure on the correct requirements.

To shed some light on the matter, we have outlined and elaborated on 5 crucial issues that you ought to bear in mind if you haven’t yet taken the plunge to apply for your PAN. Or in case you possess a PAN card that has unfortunately rendered itself obsolete.

1. The wrong application Form

There are apparently numerous individuals who have allegedly applied for PAN using the supposedly incorrect application form. It is quite perplexing how this confusion seems to arise from the apparent significant difference between the status of an NRI (Non Resident Indian) and a Foreign Citizen of India. Adding to the perplexity, some information online has been misinterpreted by the general public and even more so mis-printed. This can be quite a frustrating situation and only further complicates an already arduous process.

Foreign Citizen including OCI : do apply using the FORM 49AA process, don’t apply using Form 49A.
NRI (Non Resident Indian) including Indian Citizen : must apply using FORM 49A process.

2. Insufficient Document Portfolio

The prevalent lack of awareness among individuals pertaining to the accurate submission of supporting documents for their initial PAN application is a matter of significant concern. Unfortunately, this is a common problem that Foreign Citizens face when attempting to apply for PAN or when attempting to update their existing PAN from outside of India.

Shifting our focus to the specific documentary prerequisites for NRI’s, there appears to be a perplexing state of confusion. Partially this is due to the incorrect understanding of the meaning of what an NRI actually is.

While Indian nationals and NRI’s are required to submit three essential documents, Foreign Citizens must submit two key supporting documents. In brief here are the two main problems that are faced by an individual;

There is a lack of comprehension regarding the distinctions between the terms Indian National, NRI, and Foreign Citizen. Furthermore, erroneous documentation may be submitted from the specified list of supporting documents.

Incomplete documents, such as those containing incorrect names or addresses, may result in discrepancies between the personal information provided in the application and the supporting documents.

Do : check the guidelines and ensure you understand the requirements to save yourself from cumbersome processes.

Don’t: send insufficient supporting documents to the depositary in India.

3. Inoperative NRI PAN Card India

Under the recent official requirements to link Aadhar – PAN, individuals who possessed an Aadhar card were mandated to link it with their PAN Card. It is important to note that this was not a discretionary action but rather a compulsory obligation. It is plausible that some individuals may have been uninformed about this requirement. Allow us to dispel any prevailing misconceptions on this matter.

Illustration of Inoperative PAN

Mrs. A, an Indian citizen possesses an Indian passport and a PAN card, which has been acquired based on her Indian citizenship. Subsequently, she relocated abroad, transitioning from being a Non-Resident Indian (NRI) to ultimately becoming a citizen of a foreign country. Consequently, she is no longer considered an Indian citizen. Additionally, she did not update her PAN card status after this change in her citizenship.

Her PAN is now inoperative as her status on PAN is according to her old Indian passport. This is mostly likely due to the system recognizing her as an Indian National not a Foreign Citizen. As an Indian National both an Aadhar Card and PAN are mandatory. Therefore, remaining on her old status, the system has acted based on her Indian national status and it is inoperative.

Do : If you find yourself in a situation where your PAN has become inoperative, it is imperative that you take the necessary steps to reactivate it. The prescribed course of action entails presenting your NRI status, along with the requisite supporting documents, to the jurisdictional Assessing Officer (JAO). To find out the contact details of your JAO, you would adopt one of the following routes;

Hire a representative to act on your behalf.
Obtain your JAO details from the Income Tax Department Government of India website.

Don’t: apply for a new PAN. You must follow the correct course of action detailed above. You can be penalised for holding more than one Permanent Account Number.

4. Problems with Bank Accounts

We will now delve into two significant aspects concerning the complications associated with bank accounts. Firstly, it is imperative to acknowledge that if you are an NRI and possess an existing bank account, your bank will mandate the submission of your PAN card. Failure to comply with this prerequisite can have serious consequences. Secondly, it is of utmost importance to have your PAN card at hand when attempting to open various types of bank accounts, such as NRO, NRE, DEMAT, or any other investment accounts. Omitting this requirement can lead to substantial and onerous delays. This process is called KYC by banking authorities of India.

Do: if you do not hold a PAN and require one, you should make arrangements to obtain one.

Don’t: apply using the wrong process. Check which form is relevant to your application.

5. Indian Property Sales Process

We understand that the process of selling property in India is, to say the least, not an easy feat. There are a number of NRI and foreign citizens who have simply given up on the idea due to its endlessly complicated processes. What it really depends on is how well you can navigate the cultural system in order to achieve the sale of your Indian property. Moreover, if you do not have a PAN card, you will add more frustration to the process. To avoid getting stuck in this situation, it is advisable to be well-prepared in advance. Ensure that you obtain an up-to-date PAN card from wherever you are.

Even if that means preparing years ahead of the actual process.

Do: hold an up to date Permanent Account Number. Don’t : overlook details that need updating.

In conclusion, the PAN card India carries substantial significance as an official prerequisite. Non-possession thereof can result in delays and cumbersome procedures. Regrettably, there exists insufficient comprehension regarding PAN for Foreign Citizens, which is also evident in India, partly due to the perplexity surrounding the terms NRI and Foreign Citizen. The latter remains a relatively novel concept that has not yet gained widespread awareness among the general public. For individuals that do not have a PAN , it is advisable to obtain one as soon as possible.

How we can help

Our firm has a range of services for NRI and Foreign Citizens. We offer remote application assistance for online PAN applications using the depositary portal. If you are unsure of the process or require assistance in applying, you can work with us to obtain your PAN from any country. Select New PAN assistance and begin the process with us – Full Assistance For PAN.