Unlinked PAN & Aadhaar May Signal Trouble in Paradise for NRIs

India’s Income Tax Department has issued yet another deadline for its citizens to link their Aadhaar Cards & Pan Cards. Failing to do so by March 31, 2023, may result in a citizen’s PAN card becoming inoperative. But how does it affect non-resident Indians (NRIs)?

What is an Aadhaar Card?

Aadhaar is a 12-digit individual identification number issued by the UIDA or Unique Identification Authority of India on behalf of the Government of India. It works as a proof of address along with identity all over the country.

What is a PAN Card?

A Permanent Account Number or PAN card is a card that contains a 10-digit unique alphanumeric code, used by the Income Tax department of India to link & register all transactions of an individual. 

Aadhaar Card and NRIs - How are they linked? 

Even though NRIs are not required to have an Aadhaar Card, the ones who have one are required to abide by these regulations for their PAN to remain relevant.

“If they have an Aadhaar card, they will need to link the PAN card with it before March 31, or their PAN card will become inoperative,”  - Dixit Jain, managing director at The Tax Experts DMCC, a Dubai-based tax advisory firm.

“If that happens, they will not be able to file their income tax returns going forward and even pending income tax returns will not be processed, because the PAN is linked to the previous returns. The PAN card is also linked with your Indian bank account, and if you are investing in the stock market or making any other financial investment, your PAN card will not work, so you will not be able to complete any financial transactions. Also, your KYC (Know Your Customer) records will expire, and you will not be able to update them without an active PAN card. These are all the practical aspects that you need to keep in mind when it comes to linking the two cards,” he added.

The What-Ifs of Not Linking Your Aadhaar with PAN

  • Tax will be deducted at a higher rate.
  • You won’t be able to file ITRs.
  • Pending refunds cannot be issued.
  • Your PAN will become inoperative.
  • Pending refunds can’t be issued.
  • Pending refunds cannot be issued.
  • Pending proceedings cannot be completed.

Here are the steps you need to follow to link your Aadhaar card with PAN card:

  1. Visit www.incometax.gov.iec/foportal
  2. Under the ‘quick links’ section, click on ‘Link Aadhaar’ option.
  3. Enter your PAN and Aadhaar number, and pay late fee of INR1,000 (Dh44.64) through ‘E-pay Tax functionality’ after following the instructions on screen.
  4. Once payment is complete, visit the ‘Link Aadhaar’ section again and enter your name, mobile number, Aadhaar number and PAN.
  5. Verify the information by clicking on ‘I agree to validate my Aadhaar details’ option and click on ‘Link Aadhaar’ option.
  6. Enter the OTP received on your linked mobile number and click on ‘Validate’ to complete the linking process.

What if You are an NRI with No Aadhaar Card?

If you are an NRI and do not possess an Aadhaar card, you need not worry about the deadline but you still need to update your PAN card details through the Indian government’s online system.

“When you visit the Income Tax Department’s online portal – eportal.incometax.gov.in – you will simply need to access your profile and select your status as a non-resident. Once you do that, the government will know that you are falling under the exempt category,” Jain said.