Last reviewed: April 2026
- A PAN card is a legal requirement for NRIs and OCI holders conducting any financial activity in India. This applies to property transactions, NRO account opening, repatriation of funds, tax filing, and high-value investments.
- FEMA (the Foreign Exchange Management Act) governs what assets non-residents can hold and how money can be moved. PAN compliance is the practical foundation of FEMA compliance across all areas of Indian asset management.
- NRIs and OCI holders are formally exempt from linking their PAN with Aadhaar. The CBDT exemption applies to all non-residents and foreign citizens, but you must ensure your bank’s KYC status reflects your non-resident position (in accordance with the 182-day rule).
- Failure to hold a valid, active PAN card can block property transactions, delay repatriation, and result in TDS being deducted at the maximum rate. The scenarios below show the practical cost of being unprepared.
- Your status as NRI, OCI, PIO, or foreign citizen determines which PAN form you use. NRIs (Indian passport holders) use Form 93. OCI holders, PIOs, and foreign citizens use Form 95 under the Income-tax Rules, 2026.
If you hold Indian assets as an NRI, OCI holder, PIO, or foreign citizen, a PAN card is not optional. It is a legal requirement under the Income Tax Act, 1961 and is the foundation of FEMA compliance across every area of Indian asset management, from property transactions and NRO banking to repatriation and inheritance. This guide sets out when PAN is mandatory, what FEMA requires of non-residents, and how identity and banking compliance work in practice from the UK.
Before you begin, confirm your status. Check our guide to the difference between NRI, OCI, and PIO.
For a step-by-step guide to applying for a PAN card from the UK, see our guide to applying for an NRI PAN card.
✔ When Is a PAN Card Mandatory for NRIs and OCI Holders
A PAN card is legally required for any of the following transactions or activities involving Indian assets.
✔ Transactions over INR 50,000 and high-value investments
A PAN card is required for most financial transactions exceeding INR 50,000. This covers investments, deposits, purchases of mutual funds, and fixed deposits. Banks and financial institutions are required to collect and record PAN details for high-value transactions, and may decline to process them without one.
✔ Selling Indian property
Selling property in India as an NRI or OCI holder requires a PAN card for TDS (Tax Deducted at Source) purposes. Without it, the property registration cannot proceed, the buyer cannot comply with their TDS obligations, and the transaction will stall. TDS applies to the full sale consideration, not just capital gains, making early PAN compliance essential.
✔ Repatriation of funds (Form 15CA/15CB)
Transferring funds abroad from an NRO account requires a PAN card as part of the Form 15CA/15CB certification process. Banks will not process overseas remittance requests without it. Repatriation is capped at USD 1 million per financial year, and this limit applies after tax has been deducted and certified.
✔ Filing Indian income tax returns
If you receive any Indian-source income, including rent, dividends, or capital gains, you are required to file an Indian income tax return, and this is not possible without a PAN card. Filing also allows you to claim refunds where TDS has been deducted at a higher rate than your actual liability.
✔ Opening or maintaining an NRO account
Banks require a PAN card before opening or operating an NRO (Non-Resident Ordinary) account. Without one, your application may be refused or account operations restricted. The NRO account is the mandatory account type for receiving Indian-source income as a non-resident.
✔ Opening an NRE account
An NRE (Non-Resident External) account, used for holding and remitting foreign-earned income into India, also requires a PAN card for opening. Without it, account opening may be delayed or refused, limiting your ability to remit foreign income to India through a compliant banking channel.
✔ Buying property in India
Purchasing immovable property in India as an NRI or OCI holder requires a PAN card for registration and for compliance with applicable government reporting requirements. Without it, you cannot register the property in your name or complete the required payment procedures.
For a step-by-step guide to applying for PAN from the UK, see our complete guide to applying for a PAN card from the UK.
FEMA Compliance for Non-Residents
FEMA (the Foreign Exchange Management Act, 1999) is the foundational legislation that determines what assets you can legally hold, acquire, and transfer as a non-resident in India. When an Indian citizen migrates to the UK and their residential status changes to an NRI, and subsequently to an OCI holder or foreign citizen upon naturalisation, their asset-holding rights and compliance obligations shift under FEMA.
A breach of FEMA can attract significant penalties, including a fine of up to three times the value of the non-compliant transaction.
Under FEMA, NRIs and OCI holders are legally permitted to hold and transfer bank accounts (NRO, NRE, and FCNR), residential and commercial properties acquired by purchase, gift, or inheritance, and investments in shares, mutual funds, and securities under the Portfolio Investment Scheme or direct routes.
There is one significant restriction. Foreign citizens, including OCI holders, are strictly prohibited from purchasing agricultural land, plantation property, or farmhouses in India. If such property is inherited, it may generally be held and subsequently sold, but it can only be sold to a resident Indian citizen.
NRO and NRE Accounts: Banking Compliance
An NRO account is the mandatory account type for any non-resident receiving Indian-source income, whether rent, pension, dividends, or inherited proceeds. Under FEMA, it is illegal for a non-resident to continue holding a standard resident savings account. Upon moving to the UK, you must instruct your Indian bank to redesignate your resident accounts as NRO accounts.
An NRE account holds foreign-earned income remitted into India. Unlike an NRO account, NRE funds are fully repatriable and the interest earned is tax-exempt in India. Both account types require a PAN card for opening and operation.
A valid PAN card is sufficient to open an NRO or NRE account. An OCI card is not legally required, though banks may request additional evidence of Indian-origin status where no OCI card is held, such as a surrendered Indian passport or parents’ Indian birth certificates.
Under RBI guidelines, banks are required to conduct periodic KYC (Know Your Customer) updates based on your account’s risk profile: every 2 years for high-risk accounts, every 8 years for medium-risk accounts, and every 10 years for low-risk accounts. Failing to comply can result in a temporary account freeze.
PAN and Indian Property Transactions
A PAN card is required on both sides of an Indian property transaction, whether you are buying or selling.
When selling property, TDS is deducted by the buyer from the sale consideration at the rate applicable to NRI and OCI sellers. The seller’s PAN is required for this process and for any subsequent capital gains assessment. The buyer must also hold a TAN or, from October 2026, residents purchasing property from non-resident Indians (NRIs) are no longer required to obtain a TAN but can use the updated PAN-based TDS mechanism.
When buying property, PAN is required for registration and for the applicable government reporting statements that must be submitted for transactions above the threshold amount.
For more on the compliance picture on NRI and OCI property sales, including TDS rates, capital gains calculation, and repatriation procedures, see our NRI property sale compliance guide.
Aadhaar and the PAN-Aadhaar Linking Exemption
The most persistent source of compliance confusion for the UK diaspora is the banking notification requesting PAN-Aadhaar linking, often accompanied by a threat of account freezing.
To be eligible for an Aadhaar card, an individual must have legally resided in India for 182 days or more in the 12 months preceding the application. The majority of UK-based NRIs and OCI holders do not meet this threshold.
The Central Board of Direct Taxes (CBDT) has formally exempted NRIs, OCI holders, and foreign citizens from the mandatory PAN-Aadhaar linking requirement. If you are a UK resident, you are not required to link your PAN with Aadhaar, and your PAN should not be declared inoperative on this basis.
If your Indian bank sends a notification of a potential account freeze due to the absence of Aadhaar linking, the correct remedy is to formally update your KYC status with the bank to “Non-Resident” or “Foreign National.” This triggers the legal exemption and resolves the issue. It is not necessary to obtain an Aadhaar card.
If your PAN has already been marked inoperative, you must submit proof of your non-resident or OCI status to your Jurisdictional Assessing Officer in India to reactivate it under the NRI exemption.
Penalties for Non-Compliance
Non-compliance with PAN and FEMA obligations carries specific statutory consequences (subject to changes made by the governing authority).
Under the Income Tax Act, holding more than one PAN card attracts a penalty of Rs 10,000. If your passport number, name, or address has changed, the correct approach is to update your existing PAN record, not apply for a new one.
FEMA contraventions are handled by the Enforcement Directorate. Following the Decriminalisation of Minor Offences amendment, civil penalties for minor technical FEMA breaches are capped at Rs 2 lakhs per contravention. More significant violations, including holding non-permitted assets without regulatory approval, attract penalties calculated against the value of the transaction.
For taxable transactions where PAN is legally required but not provided, TDS will be deducted at the maximum applicable rate rather than the standard rate. This can be recovered through an income tax return, but requires additional process and delay.
How Status Affects Your Obligations
Compliance obligations under FEMA and the Income Tax Act differ based on your legal status.
An NRI (Non-Resident Indian) holds an Indian passport and lives outside India. NRIs apply for a PAN card using Form 93 under the Income-tax Rules, 2026.
An OCI holder (Overseas Citizen of India) holds a foreign passport, for example, a British passport, and is classified as a foreign citizen for PAN and FEMA purposes. OCI holders apply using Form 95, regardless of Indian-origin background.
A PIO (Person of Indian Origin) who holds a foreign passport and has not obtained OCI status is also classified as a foreign citizen for PAN purposes, and uses Form 95.
A foreign citizen with no Indian-origin status who holds a foreign passport also uses Form 95.
The practical FEMA compliance obligations, including NRO redesignation, KYC requirements, the PAN mandate for financial transactions, and repatriation procedures, apply broadly across all non-resident categories. Status primarily determines which PAN form applies and which banking documentation is required.
For a basic breakdown of these status categories and their implications, see our guide to the difference between NRI, OCI, and PIO.
Real-World Scenarios
The following examples are fictional and used for illustrative purposes only.
Scenario: Selling property without a PAN card
Mr. Patel, an OCI holder based in the UK, travels to India to finalise the sale of his ancestral property. At registration, he discovers that a PAN card is required for TDS compliance and transaction recording. Expecting a quick process, he applies, but issuance takes several days due to verification procedures. With his return flight less than a week away, the sale stalls, the buyer withholds payment, and Mr. Patel risks losing the deal and incurring additional costs. Obtaining a PAN card in advance would have prevented these complications.
Scenario: Settling inherited assets without a PAN card
Ms Patel, an OCI holder in the UK, needs to access her late parent’s Indian bank accounts and transfer the proceeds as the legal heir. Without a PAN card, she cannot open an NRO account to receive the funds, stalling the transfer entirely. The delay creates complications with the inheritance process, tax liabilities, and lost interest on the estate. Securing a PAN card in advance would have allowed the transfer to proceed without disruption.
Frequently Asked Questions
Yes. A PAN card is legally required for all NRI and OCI property sales in India. Without it, the TDS process cannot proceed, the transaction cannot be registered, and the sale will not complete. TDS is deducted by the buyer from the full sale consideration, and this requires your PAN to be valid and active before the transaction begins.
Yes. Indian banks require a PAN card before opening or operating an NRO (Non-Resident Ordinary) account. This is the mandatory account type for receiving Indian-source income as a non-resident. Some banks may accept an application while PAN is being processed, but account operations will be limited until PAN is provided.
Yes. Under FEMA, a non-resident cannot continue holding a standard resident savings account. Upon changing your residential status to the UK, you must instruct your Indian bank to re-designate your resident savings accounts as NRO (Non-Resident Ordinary) accounts. Failure to do so is a FEMA contravention.
No. A PAN card is valid for a lifetime. However, if your PAN has been declared inoperative due to a failure to link it with Aadhaar, you must submit proof of your non-resident or OCI status to your Jurisdictional Assessing Officer in India to reactivate it under the NRI exemption category. NRIs, OCI holders, and foreign citizens are formally exempt from the mandatory PAN-Aadhaar linking requirement.
Under RBI guidelines, Indian banks must conduct periodic KYC updates based on each account’s assigned risk profile. For UK-based clients, this means submitting updated identity and address documents every 2 years for high-risk accounts, every 8 years for medium-risk accounts, and every 10 years for low-risk accounts. Failing to comply can result in a temporary freeze on your NRO or NRE account.
Yes. FEMA applies to all non-residents, including OCI holders. Under FEMA, OCI holders may legally hold residential and commercial property, NRO, NRE, and FCNR bank accounts, and investments in Indian securities. However, OCI holders are prohibited from purchasing agricultural land, plantation property, or farmhouses. If such property is inherited, it may only be sold to a resident Indian citizen.
How Whytecroft Ford Can Help
PAN compliance and FEMA obligations are rarely isolated questions. For most clients based in the UK, PAN is one element of a wider matter, a property sale, an inherited asset, an NRO account re-designation, a repatriation, and understanding the broader framework before taking action can prevent delays and unexpected associated costs.
Whytecroft Ford advises NRIs, OCI holders, PIOs, and foreign citizens on Indian law from the UK. Our Indian Law Consultation offers circumstance-specific advice, which may involve PAN, NRO and NRE banking, property law, and cross-border legal requirement matters.
For full PAN card application assistance, including document guidance, application assistance, and submission guidance, see our PAN card application service.
To discuss your situation, call us on 0208 757 5751 or complete our contact form.
Regulatory Framework and Technical Sources
Foreign Exchange Management Act, 1999 (FEMA mandates on asset acquisition, banking, and real estate for non-residents); Income Tax Act, 1961 (Section 139A regarding PAN jurisdiction and Section 114AAA exemptions for non-residents); The Aadhaar Act, 2016 (Section 3 detailing the 182-day residency eligibility threshold); Central Board of Direct Taxes (CBDT) notification on NRI and foreign citizen exemption from mandatory PAN-Aadhaar linking.
