Clarifications on Inoperative PANs for NRIs and OCIs-Clarifications provided by Income Tax on Twitter Handle

Non-resident Indians (NRIs) and Overseas Citizenship of India (OCIs) are facing a significant issue with their PAN cards becoming inoperative, despite being exempted from linking PAN with Aadhaar. This development has caused widespread concern among affected individuals, especially in terms of the consequences they might face. Fortunately, the Income-tax Department has taken steps to address these concerns and has shared helpful clarifications on its Twitter handle.

The first clarification pertains to NRIs. The Income Tax Department has mapped the residential status of NRIs based on their filed income tax returns (ITR) in the last three assessment years. Alternatively, if NRIs have informed their Jurisdictional Assessing Officer (JAO) about their residential status, it has also been taken into account. However, if any of these criteria are not met, PAN cards have been rendered inoperative. To rectify this situation, NRIs with inoperative PAN cards are requested to inform their respective JAOs about their current residential status and submit supporting documents for an update in the PAN database.

Similarly, PAN cards of OCIs and foreign citizens who may have applied for PAN under the resident status but have not corrected or updated their residential status with the JAO or filed ITR in the last three assessment years have been rendered inoperative. To resolve this issue, OCIs and foreign citizens are urged to inform their respective JAOs about their current residential status and provide supporting documents for an update in the PAN database.

It's important to note that an inoperative PAN is different from an inactive PAN. Despite PAN becoming inoperative, individuals can still file their Income Tax Returns (ITR). However, there are a couple of consequences associated with inoperative PANs. Firstly, pending refunds and the corresponding interest on such refunds will not be issued to individuals with inoperative PANs. Additionally, tax deductions or collections will be required to be made at a higher rate for inoperative PANs, in accordance with section 206AA/206CC.

Staying informed about these clarifications and following the guidelines provided by the Income-tax Department is crucial for NRIs and OCIs to ensure a smooth income tax filing process. By updating their residential status with the Jurisdictional Assessing Officer (JAO) and providing the necessary documents, individuals can rectify the inoperative PAN situation and avoid potential complications.