“Including Overseas Citizen of Indian – Foreign Citizens”
Continuing from What is a PAN Card. How to apply for NRI PAN?, in this section we further detail the uses of PAN as well as any apparent benefits for individuals living abroad in relation to the parameters of the Income Tax Department of India.
Beginning with a recent statement by the Ministry of Finance of India as highlighted below;
However, the 43 Crore plus, does not segregate Indian nationals and NRI’s it is a sum total that the MOF has provided.
As an NRI, Overseas Citizens of India OR Persons of Indian Origin you may maintain financial assets in India. Further your assets may interlink between both movable and immovable assets. For example;
- Movable Assets – Indian bank accounts, Stocks and Shares etc, OR
- Immovable Assets – Indian property such as buildings, land and so on
It is likely that at some point you may implement transactions related to your movable and immovable assets over a certain period in India. Whether you are in India or not, you may provide an Indian Power of Attorney to an individual that can act on your behalf in India. Therefore, by doing so you may fall under the parameters set by the Government of India in relation to ITD. This will inevitably involve a PAN Card.
PAN And Its Current Construct
Similarities to other countries.
As stated by the Income Tax Department, Government of India, the current series of PAN was started in 1995 after studying the system of identification number initiated in the United Kingdom known as National Insurance Number, USA known as Social Security Number, Spain known as Fiscal Identification Number and Australia known as Tax File Number.
PAN is directly related to financial activities in India in respect of individuals as well as companies.
So where does the scope of PAN spread when it comes to financial transactions in India?
NRI PAN Uses – Financial Transactions Where Quoting PAN Is Mandatory
If you are a (Foreign Citizen) NRI, Overseas Citizen of India or Person of Indian Origin according to the Government of India you are not automatically exempt from PAN. The details presented below apply to both Indian Nationals as well as Foreign Citizens albeit some may or may not apply to you. Application of any would also depend on whether you do or will carry out any such activity as described.
Below you will find a comprehensive list for PAN uses, which are subsequently mandatory under regulations.
Focusing on NRIs, we begin with an extremely popular one, NRI Indian Property Sale.
Sale or purchase of immovable property
(a) sale or purchase of any immovable property valued at five lakh rupees or more;
(As an example, if you are an NRI and are undergoing property sale in India, it is likely that your property sold would amount to over five lakh rupees)
Sale of purchase of a motor vehicle or vehicle
(b) sale or purchase of a motor vehicle or vehicle, [the sale or purchase of a motor vehicle or vehicle does not include two wheeled vehicles, inclusive of any detachable side-car having an extra wheel, attached to the motor vehicle;
Financial Institutions Transactions Exceeding A Certain Amount
(c) a time deposit, exceeding fifty thousand rupees, with a banking company;
(d) a deposit, exceeding fifty thousand rupees, in any account with Post Office Savings Bank;
(e) a contract of a value exceeding one lakh rupees for sale or purchase of securities;
(f) opening a bank account;
Utility & Leisure Exceeding A Certain Amount
(g) making an application for installation of a telephone connection (including a cellular telephone connection);
(h) payment to hotels and restaurants against their bills for an amount exceeding twenty-five thousand rupees at any one time ;
Bank Transactions Exceeding A Certain Amount
(i) payment in cash for purchase of bank drafts or pay orders or banker’s cheques for an amount aggregating fifty thousand rupees or more during any one day;
(j) deposit in cash aggregating fifty thousand rupees or more with a bank during any one day;
(k) payment in cash in connection with travel to any foreign country of an amount exceeding twenty-five thousand rupees at any one time.
(l) making an application to any banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act) or to any other company or institution, for issue of a credit or debit card;
(m) payment of an amount of fifty thousand rupees or more to a Mutual Fund for purchase of its units;
(n) payment of an amount of fifty thousand rupees or more to a company for acquiring shares issued by it;
(o) payment of an amount of fifty thousand rupees or more to a company or an institution for acquiring debentures or bonds issued by it;
(p) payment of an amount of fifty thousand rupees or more to the Reserve Bank of India, constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934) for acquiring bonds issued by it;
(q) payment of an amount aggregating fifty thousand rupees or more in a year as life insurance premium to an insurer as defined in clause (9) of section 2 of the Insurance Act, 1938 (4 of 1938);
(r) Payment To A Dealer Exceeding A Certain Amount
(i) of an amount of five lakh rupees or more at any one time; or
(ii) against a bill for an amount of five lakh rupees or more, for purchase of bullion or jewellery:
Some of the above areas may or may not apply to you if you are an NRI, Overseas Citizen of India or a Person of Indian Origin, as India would not be your primary place of residence.
Nonetheless, to ensure you are equipped with your PAN where necessary you should apply for PAN for NRI. Preparedness is key.
Can An NRI File Income Tax Without A PAN
No you cannot, however, you may not require a PAN if you do not have any financial activities in India that fall under the allowed parameters of the Government of India.
Return of Income Not To Be Filed In Certain Cases For NRI
It shall not be necessary for a non-resident Indian to furnish under sub-section (1) of section 139 a return of his income if—
(a) his total income in respect of which he is assessable under this Act during the previous year consisted only of investment income or income by way of long-term capital gains or both; and
(b) the tax deductible at source under the provisions of Chapter XVII-B has been deducted from such income.
Are there any specific pros to PAN for Income Tax for NRI then? Yes, by obtaining a PAN, you would be able to take advantage of relevant tax bands applicable to your category under ITD.Gov.IN should you need to do so in the near future. (ITD.Act-provisions-non-resident)
Details required on Sale of Indian Property for TDS (Tax Deducted At Source)
As per FORM 26QB, on sale of property in India, the following would be provided;
- PAN of the seller & buyer
- Communication details of seller & buyer
- Property details
- Amount paid/credited & tax deposit details
Below you will find frequently asked questions that may be of further help when assessing as an NRI for PAN.
If you require assistance for NRI PAN we may be able to assist PAN application preparation services.
Frequently Asked Questions
As advised by the ITD.Gov.IN, IT PAN Service Centers or TIN Facilitation Centers shall not receive any incomplete and deficient PAN application.
The Income Tax Department Government of India advises the following; You are required to file declaration in Form No.60 in which you will have to mention the reason for not having PAN. Your declaration will be forwarded to the Income-tax Department by the person. to whom you submit the Form No.60.
mandatory for me?
No. However, in case you enter into transaction where quoting of PAN is mandatory, then you are required to file
declaration in Form No.61.
Obtaining or possessing more than one PAN is against the law, for which penalty of Rs. 10,000/ may be imposed.(Source; ITD)
- Transfer of property in India
- Indian Property disputes
- Sell property in India
- Power of Attorney Service
We can also assist with the following NRI Services in London:
- Illegal occupation of property in India
- Family Settlements and partition of NRI Indian property
- Ancestral real estate and inheritance advisory under Indian law
- NRI Property Transfer
- Possession of NRI Property
- Recovery of NRI money under Indian Law
- NRI Succession Certificate in India
- Injunction against alienation of NRI property in India
- Developer Claims under the Consumer Protection Act in India
- NRI property disputes
- Visas to India
- Indian Power of Attorney
- NRI PAN Card
- Overseas Citizenship of India (OCI)
- Inter-Country Adoption
- Divorce proceedings under Indian Law for parties settled abroad