PAN-Aadhaar Linking: For Indians living overseas, there’s a rule concerning PAN and Aadhaar that often leads to confusion. When the PAN portal indicates that the status is “inoperative,” many individuals quickly assume it’s because they haven’t linked their Aadhaar and rush to pay the ₹ 1,000 fee. However, the situation is somewhat different for NRIs. According to the Income Tax Act, non-resident individuals are exempt from the requirement to link Aadhaar with PAN.
The real issue can occur if your NRI status is not accurately reflected in the records of the Income Tax Department. Therefore, it’s crucial to first determine why your PAN is marked as inactive and the appropriate steps to reactivate it.
Is linking PAN and Aadhaar necessary for NRIs?
First, it’s essential to recognize that linking your PAN with Aadhaar is not compulsory for every NRI. The Income Tax Department states that non-resident individuals are exempt from the Aadhaar-PAN linking requirement as per the Income Tax Act, 1961.
Moreover, certain individuals living in Assam, Jammu and Kashmir, and Meghalaya, those aged 80 years or older, and individuals who are not Indian citizens also fall under the specified exemption categories. Thus, just because a prompt or notification appears on the PAN portal to link Aadhaar, NRIs should refrain from hastily paying the Rs 1,000 fee.
Why might an NRI’s PAN show as inoperative again?
If an individual’s NRI status is not properly recorded in the Income Tax Department’s database, the system may classify them as a regular taxpayer. This could result in the PAN being marked as inactive.
As per reports, if someone believes they belong to the exempted category, they should contact the assessing officer of the relevant jurisdiction and provide documentation that verifies their status.
The official can then update the status in the PAN records. If you’re an NRI and your PAN is listed as inoperative, your initial action should be to verify your status rather than panic and pay the fee.
When will the fee of Rs 1,000 be paid?
This is where utmost caution is needed. If you are indeed an NRI under the Income Tax Act and fall under the exempt category, it’s not necessary to immediately pay Rs 1,000 just to activate your PAN. You should first correct your exempt status in the Income Tax Department’s records.
However, if after verification it is determined that you do not fall under the exemption category and your PAN needs to be linked to Aadhaar, you will need to provide your Aadhaar number as per the prescribed procedure to activate the inactive PAN, and a fee of Rs 1,000 is applicable. According to the Income Tax Department, this fee continues throughout the PAN reactivation process. Leaving your PAN inoperative for a long period of time is not a good idea. According to the Income Tax Department, some tax losses may occur during the period of inactivity.