If you’re in the process of selling Indian property, opening a new Indian bank account such as a Non Resident Ordinary or Non Resident External account, you’ve probably been asked to provide your Permanent Account Number. This article provides you with a round up of a selection of frequently asked questions during 2023 in relation to PAN.
The segment is divided into two categories;
Firstly, the application process – frequently asked questions. Secondly, PAN’s mandatory use for a Foreign Citizen of India.
We’ve selected five popular questions in each category that have been unclear for Foreign Citizens during 2023 so far and provided answers.
Application Process FAQs : Permanent Account Number
1. You can’t apply from outside of India
A Foreign Citizen can apply for a Permanent Account Number from outside of India. You may also be a Foreign Citizen that holds an Overseas Citizenship of India (OCI) , you can apply for a Permanent Account Number without having to be in India.
Due to continuous technological developments by the Indian government over the last decade, a non Indian national has more accessibility to its mandatory services.
2. Your documentary portfolio can be uploaded online
Despite the Government’s technological developments, there are still some parts of the application that can’t be completed online. Your “documents to be submitted” or documentary portfolio is one of them.
The application requires both an online process as well as hard copy submission.
3. The DSC based process
This facility can be used by applicants having a valid Digital Signature Certificate (DSC) issued to them by authorized Certifying Authority (CA) in India. In case of Individual applicants, the DSC of the applicant should be used for digitally signing the application. The DSC should bear the name of the applicant / Representative Assessee as mentioned in the application form.
4. Supporting documents need to be self attested
For a Foreign Citizen, you do not need to self attest your documents unless asked to do so. However, if you select a supporting document that specifies that an official attestation is required, you must ensure that this is done. Your application may be subject to delays or rejection if you are unsure of its requirements.
5. Aadhar & Permanent Account Number Link
Earlier this year, a notification by the Government of India and its relevant departments required Aadhar and PAN to be linked. The two main bodies involved in the process are;
- Income Tax Department Government of India
- Unique Identification Authority of India
The deadline was by 30 June 2023 for Resident Indians. However, it was later clarified that Foreign Citizens are exempt from the mandatory process.
Those of you that hold a PAN originally based on a Resident status, may have seen that your PAN could have become inoperative after 30 June 2023 (you may or may not have held an Aadhar). If you became a Foreign Citizen of India at a later date and did not update your status you may be now facing issues with your PAN.
Mandatory Use FAQs : Permanent Account Number
1. Opening a new NRO account
Popularly, a number of Foreign Citizens are opening NRO accounts to make things more convenient. Contrary to popular know-how, a PAN is a mandatory requirement in order to open a new account. Furthermore, your choice of Indian bank is legally obligated to ensure they follow the KYC of each new client.
For example, you may be opening an NRO account for your Indian property rental income. The NRO will allow for your Indian income to be held in account (subject to TDS). If your income is below the threshold of Rupees 2,50,000 in a given financial year, as a Foreign Citizen you would be exempt from tax up to this amount. However, you still require a Permanent Account Number to hold an NRO account.
2. Indian property sale
Whether you are selling your Indian property yourself or through a trusted Power of Attorney your Permanent Account Number should be ready for due process. Here’s an illustration to gage a better understanding;
Mr & Mrs A, are Indian by origin but hold Foreign Citizenship. They are Indian property owners. They’ ve held one of their properties in India for more than 36 months. Now they are selling the property with the intention to bring back the sale proceeds to their country of residence.
Firstly, as they have had the property for more than 36 months, capital gains guidelines will apply. Secondly, the legal formalities and paperwork for selling their property will require them to both hold a PAN. Thirdly, to repatriate their proceeds, an Indian bank account will be required, therefore PAN is mandatory.
3. Opening a new NRE account
With high interest rates for savings held in India, it is not a surprise that a number of Foreign Citizens open NRE accounts to hold their foreign income earned. Despite, to be clear, the interest earned on the capital invested may be subject to tax in your country of residence. Also, if a double taxation agreement applies, you may be able to gain some relief on the income earned through interest. You will need a PAN to open an NRE account.
4. Demat Accounts
To invest in Initial Public Offerings (IPO) in India, as a Foreign Citizen you need an NRE or NRO account. Either one, a PAN will be required during the time of account opening, set up and use.
5. Financial Investments
Investments such as mutual funds and immovable property purchases will require you to provide your Permanent Account Number to complete your transaction smoothly. The process of selling Indian property depending on its location in India, can be a cumbersome process. If unprepared with mandatory requirements such as PAN, it can further delay your circumstances. Therefore, it is advisable to ensure you are ready for the process.
In conclusion, the Permanent Account Number for a Foreign Citizen is an important part of financial transactions in India. Without one you may experience process delays as well as administrative complications. Forwarding into the next few years, it will continue to remain an integral component of Indian investments. If you want to apply for your PAN from abroad we can assist.
How can we help
If you have tried to apply or update your PAN from abroad as a Foreign Citizen and are unable to proceed, we can assist you. Our Full assistance service for new PAN , Our Full assistance for existing PAN, includes assistance in full preparation and guided submission via the official depositary process. We can assist with updating your existing PAN as an NRI from abroad, please contact us.
Further Insights – FCNR
What is FCNR(B) Fixed Deposit Account?
- FCNR(B) is a fixed deposit held in foreign currency
- An investment option for NRI/ PIO/ OCIs looking to retain their money in foreign currency
- An FCNR you will require a PAN
- The full terminology is Foreign Currency Non Resident Account
Frequently Asked Questions
Your Foreign address can be provided.
Once your PAN is allotted, the E-PAN is sent to you within 10-15 days by the depositary.
Return is to be filed only if you are liable to file return of income under section 139.