NRIs, Who Are Not Required To Possess Aadhaar, Struggling To Reactivate Their PAN
Moneylife Digital Team 14 July 2023
UPDATED on 16 July 2023 at 1pm to add response from I-T dept on this story...

At midnight on 30th June and 1 July 2023, the Indian government mandatorily deactivated all permanent account numbers (PANs) issued by the income-tax (I-T) department with proper verification for not linking it with Aadhaar numbers. However, in their bulldozing mission, the government and tax department deactivated the PANs of almost all non-resident Indians (NRIs) as well. NRIs are not required to possess an Aadhaar number and, hence, cannot link their PANs within the deadline. Since then, many NRIs have been venting their frustration about deactivated PANs on social media. Reactivating PANs is tedious and NRIs must submit documents to show their non-residency period. 
 
According to A Gupta, an NRI for the past 10 years, he did everything recommended by his chartered accountant (CA) and the tax helpline but is stuck with an inoperative PAN and its consequences, which will cause immense financial losses and make him non-compliant in future. "To begin with, I cannot file my income tax return (ITR) before the 31st July deadline this month. ICICI Securities had blocked many NRI broking accounts, including mine, for a few days. Now they unblocked the account for trading, but (it is) subject to significantly higher penal rates of tax deducted at source (TDS) that cannot even be set off against tax liabilities."
 
In a tweet, Murali Neelakantan, principal lawyer at Amicus, says that due to the PAN linkage issues, NRIs cannot carry out transactions and their accounts are frozen.
 
 
MD Pais says his residential status has been NRI for the past four years and, since he has not linked his non-existing Aadhaar, his PAN has been made inactive.
 
 
In his tweet, Rahul Garg, a CA, says the PAN status of NRIs changed to active and inoperative after 30 June 2023, and I-T and TRACES helpline persons do not have a solution for this.
 
 
According to one Arun, who uses Jumanji as his name, as per UIDAI Act, it is illegal for NRIs even to have an Aadhaar. "Why are NRI PANs made inoperative by the I-T dept for not linking PAN and Aadhaar?"
 
 
From 1 July 2023, the PAN of taxpayers who have failed to link their Aadhaar became inoperative. The consequences during the period that PAN remains inoperative include no refund shall be made against such PANs, interest will not be payable on such refund for the period during which PAN remains inoperative, and tax deducted at source (TDS) and tax collected at source (TCS) would be deducted and collected at a higher rate, as provided in the I-T Act.
 
However, the tax department says PAN can be made operative again in 30 days on intimation of Aadhaar to the prescribed authority after payment of a fee of Rs1,000.
 
"Those persons who have been exempted from PAN-Aadhaar linking will not be liable to the consequences mentioned above. This category includes those residing in specified states, a non-resident as per the Act, an individual who is not a citizen of India or individuals of the age of 80 years or more at any time during the previous year," the I-T department says in a statement.
 
However, this is not the case, and many NRIs are pointing out how they cannot carry out transactions due to their inoperative PANs.
 
In a tweet, Saraswathi Penneru, an NRI, says on 4th July, she linked her PAN with Aadhaar after paying the fee of Rs1,000. While PAN has become active, she cannot initiate TDS payment and is getting a message that her PAN is active and inoperative. 
 
The I-T department, however, says non-residents, who had intimated their NRI status to the department, are already exempted from PAN - Aadhaar linking, and their PANs are active and operative. 
 
"Persons who have not yet intimated their NRI status to the department are requested to kindly contact their jurisdictional assessing officer (JAO), online with supporting documents, including a copy of PAN card and copy of their passport showing period of residence outside India, so that their status can be updated in the PAN database. Details of JAO are available at: https://eportal.incometax.gov.in/iec/foservices/#/pre-login/knowYourAO," it says in a tweet reply. 
 

UPDATE:
Responding to this article on Twitter, the I-T department says it has mapped the residential status of NRIs in case they have filed the ITR in any of the last three assessment years (AYs) or they have intimated their residential status to the JAO. The PANs have been rendered inoperative in case any one of the above-mentioned criteria is not met.

"The NRIs whose PANs are inoperative are requested to intimate their residential status to their respective JAO with supporting documents including colour-scanned copy of PAN and copy of documents in support of non-resident status (passport showing the period of residence outside India) with a request to update their residential status in the PAN database," it added.
 

Comments
govindwattal
11 months ago
what is the difference between active/deactive and operative/inoperative PAN ? Is their a difference
?
govindwattal
11 months ago
from a clear reading of the text it is clear that if you have not intimated the JAO despite having filed several returns, your PAN will be deactivated.
Gupta10
11 months ago
Firstly, a big thank you to ML for raising this issue in the media in less than 24 hours after my email.

I would like to add that all the responses given by IT department as mentioned in this email are total lies.

I have filed my return as NRI not once in last 3 years as they say above, but I have filed every year for the last 10 years. They still don't get it that I'm a NRI and have made my PAN inoperative.

They ask us to write to the JAO. I have done that too, but got no response. By the way, my assessing officer is the International Taxation Ward in Mumbai, which only handles NRI. My Assessing Officer was changed from Resident ward to NRI ward back in 2016 based on my application. How else does the IT department expect us to communicate to them that we have become NRIs.

All banks deduct 30.9% TDS on even 1 rupee of interest income credited to our account. The IT department does not object when such atrocious rules applicable to NRIs are being applied to us for last 10 years, but now they seem to have amnesia and suddenly think we are residents. If so, first please refund all the excess taxes you apply to NRIs and hence to my account.

There is zero accountability of this god forsaken department and no one cares a damn for the severe harassment of honest taxpayers by the tax department. They don't have the balls to go after the thugs who pay zilch as tax and all they know is how to harass people who are honestly paying more than their due share.

I have no idea how to resolve this mess as I have written emails to everyone and made calls to all the sarkari officers to boost their ego, yet zero result.
naughtygolfer
11 months ago
There has been a general fiasco in this regards. Such drastic actions should not have been taken by the Government who is supposed to be sensitive to the problems of common man. In my case, Zerodha blocked my trading and CDSL Demat account, even though the PAN was linked with Aadhaar long time back. If you try to link it again, you get the message that your PAN-AADHAAR is already linked. My NSDL and Mutual fund accounts were having no problem. What a loss for people (And in tern to Govt. t00)
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