Residential Status Mapping for NRIs
The Income Tax Department understands the concerns raised by Non-resident Indians (NRIs) regarding their PANs becoming inoperative, despite being exempted from linking PAN with Aadhaar. To address this, the department has implemented a process to map the residential status of NRIs.
If you are an NRI and your PAN has become inoperative, it may be because you have not filed income tax returns (ITR) in the last three assessment years or failed to inform your Jurisdictional Assessing Officer (JAO) about your residential status. However, there is a simple solution. You can inform your respective JAO about your residential status and provide supporting documents for an update in the PAN database. For details on your JAO, visit JAO Details.
Rectifying PAN Status for OCIs and Foreign Citizens
Overseas Citizenship of India (OCIs) and foreign citizens who have applied for PAN under resident status may also have faced the issue of inoperative PANs. If you fall into this category, it is crucial to ensure that you have corrected or updated your residential status with your JAO or filed ITR in the last three assessment years.
To rectify the status of your PAN, simply inform your respective JAO about your current residential status and provide the necessary supporting documents. By doing so, you can request an update in the PAN database.
Understanding the Difference: Inoperative PAN vs. Inactive PAN
It is important to note the distinction between an inoperative PAN and an inactive PAN. Even if your PAN becomes inoperative, you can still file your Income Tax Returns (ITR) without any hindrance. It does not affect your ability to fulfill your tax obligations.
Consequences of an Inoperative PAN
While an inoperative PAN does not impede your ability to file ITR, there are a few consequences to be aware of:
Pending Refunds: Unfortunately, if your PAN is inoperative, any pending refunds and associated interest will not be issued. To ensure a smooth refund process, it is crucial to keep your PAN active and up to date.
Tax Deductions and Collections: For transactions involving individuals with inoperative PANs, tax deductions or collections may be required at a higher rate, as per section 206AA/206CC. To avoid any complications, it is advisable to maintain an active PAN and keep your tax matters in order.
These clarifications have been provided by the Income Tax Department to address the concerns raised by NRIs, OCIs, and PAN holders whose PANs have become inoperative. By following the necessary steps and keeping your residential status and PAN information up to date, you can ensure a smooth tax compliance process.
