I-T Dept Clarifies Concerns over Inoperative PANs, Urges Disclosure Of Foreign Assets

The I-T Department clarified that NRIs must update their residential status with supporting documents to reactivate their PANs. It also urged disclosure of foreign assets while filing ITR
I-T Dept Clarifies Concerns over Inoperative PANs, Urges Disclosure Of Foreign Assets

The Income Tax Department, on July 18, 2023, asked Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) to update their residential status to reactivate their PANs.

The department was addressing concerns certain NRIs and OCIs raised regarding their Permanent Account Numbers (PANs) becoming inoperative, even though they are exempted from linking their PANs with Aadhaar. It also addressed concerns of PAN holders whose PANs have become inoperative due to non-linking their PAN cards with Aadhaar. The department has also clarified how to reactive the PAN cards for NRIs/OCIs.

NRIs With Inoperative Pans Must Update Residential Status

NRIs whose PANs have been rendered inoperative must inform their respective Jurisdictional Assessing Officer (JAO) about their current residential status and supporting documents to update the PAN database. The department has mapped the residential status of NRIs who have filed Income Tax Returns (ITRs) in any of the last three assessment years (AYs) or have communicated their residential status to the JAO, it said in a release. If the above requirements are not met, the PAN cards will be suspended.

OCIs/Foreign Citizens Should Update PAN Residential Status

Similarly, PANs of OCIs/foreign citizens, who may have applied for PAN under the resident status and have not corrected/updated their residential status with the JAO or filed ITR in any of the last three AYs, have been rendered inoperative. To rectify this, OCIs/foreign citizens are encouraged to intimate their residential status to their respective JAO, providing relevant supporting documents to update the PAN database.

An inoperative PAN Is Not An Inactive PAN

The Income Tax Department clarified that an inoperative PAN is not an inactive PAN. Taxpayers with inoperative PANs can still file their Income Tax Returns (ITRs) without hindrance. However, I-T Department reiterated that certain consequences accompany this status:

i. Pending refunds and interest on such refunds will not be issued to inoperative PANs.

ii. TDS (Tax Deducted at Source) will be deducted at a higher rate for inoperative PANs as per section 206AA.

iii. TCS (Tax Collected at Source) will be collected at a higher rate for inoperative PANs under section 206CC.

How To Reactivate Inoperative PAN  

I-T Department said that the PAN could be made operative again in 30 days from July 1, upon intimation of Aadhaar to the prescribed authority after payment of a fee of Rs. 1,000.

To reactivate the inoperative PAN by linking it with Aadhaar, individuals can use the e-Pay Tax feature available on the Income Tax e-filing portal. Follow these steps:

  •  Click on "Link Aadhar" in the Profile Section of the Dashboard on the income tax e-filing portal.

  •  Enter your PAN and Aadhaar Number and select 'Continue to pay through e-Pay Tax.'

  •  Select AY 2024-25 and choose Payment Type "Other Receipts (500)" before proceeding.

  •  Complete the payment process, and once the fee is paid, link Aadhaar number to PAN using the e-Filing Portal.

I-T Dept Urges Disclosure Of Foreign Assets And Income

The I-T Department has urged Indian residents holding foreign bank accounts, assets, or income to fill the Foreign Asset Schedule in the ITR for AY 2023-24 by July 31, 2023.

Failure to disclose foreign assets/income one holds as of December 31, 2022, may attract a penalty of Rs 10 lakh. The foreign assets include foreign bank accounts, foreign equity and debt, financial interests, immovable property, and other prescribed assets in Schedule FA.  

This schedule must be filled even if there is no taxable income or if the same information is captured on any other schedule (like schedule AL) since foreign assets are created from disclosed sources.

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