Aadhaar & PAN for NRIs - What You Really Need to Know

The need to link Aadhaar with PAN is one of the most misinterpreted portions of the Indian tax compliance. Especially for NRIs, as the rules for resident and non-resident Indians have significant differences. NRIs are usually not mandated, but still, resident Indians should link their Aadhaar and PAN to ensure their PAN remains active and they do not face any kind of penalty. NRIs need to ensure that their residential status is updated correctly in the records under the Income Tax Department. However, such an exemption is not automatic. This blog gives an explanation of what NRIs must know about the PAN and Aadhaar link for NRIs.  

PAN Card Rules for NRIs

Some of the high-value and regulatory activities that require PAN include -

• Obligatory NRO fixed deposits, TDS deductions, and reporting taxes.

• Mandatory investments in mutual funds in SEBI KYC guidelines.

• Very necessary in trading Indian stocks, even for portfolio investment.

• Mandatory when selling a property, particularly when the TDS under Section 195 is applicable.

Maintaining the correct PAN is necessary because if the PAN is not active, there may be the following consequences:

• Cannot file ITR

• Higher TDS

• Cannot sell the property smoothly

• Mutual fund transactions may be blocked

• The trading account may be rendered inactive

Is PAN and Aadhaar Link for NRI Mandatory?

NRIs aren't required to link Aadhaar with PAN. The rule is applicable only to residents who live in India for more than 182 days in a financial year. Only residents are at risk of PAN becoming inoperative if not linked to Aadhaar. NRIs who have both PAN and Aadhaar can link both, but it’s not a necessity. However, NRIs must report their NRI status. 

• The NRE/NRO bank accounts under the KYC framework of RBI (which accepts passports and visa/OCI documents) are not obligatory to have Aadhaar. 

• NRIs need not have Aadhaar, as the SEBI allows passports and OCI. 

• In addition, Aadhaar is not required when applying for a PAN card because non-Aadhaar documentation is used by foreign citizens and NRIs in a form called 49AA.

Aadhaar Card for NRIs

NRIs can optionally apply for Aadhaar with an Indian passport. NRI children who have Indian passports can also apply for Aadhaar using their passports. Once NRIs get their Aadhaar, they can link it to PAN if they want to streamline all financial information. But it’s not a compulsory requirement. 

Common​‍​‌‍​‍‌​‍​‌‍​‍‌ Problems Faced by NRIs

NRIs should know about PAN Aadhaar linking because incorrect PAN can result in multiple issues:

• Banks may wrongly treat NRIs as residents, triggering Aadhaar-related checks and PAN errors.

• NRIs can correct this by submitting passport entry/exit pages.

• RBI mandates banks to accept such proof.

When will PAN Aadhaar Link Become Mandatory for NRIs?

NRIs may need to link PAN and Aadhaar during the following scenarios:

Returning NRIs: NRIs after they return to India and become a resident must link their PAN with Aadhaar. They must convert their bank and trading accounts to resident accounts. If an NRI already has an Aadhaar issued when they were a resident must link their PAN and Aadhaar. Those who don’t have Aadhaar can apply for a new one and complete PAN Aadhaar linking.

NRIs without status update: For NRIs who live abroad, if they have not updated their NRI status in PAN records, it may still show as resident. In that case, the system will ask for PAN Aadhaar linking. The PAN correction form is to be filled out to update the NRI status. 

PAN categories for NRIs

PAN is issued under certain categories of -

• NRI individuals

• Foreign citizens

• OCI holders

• Indians foreigners with Indian income.

• The PAN application portal of NSDL documents every category and document requirement thereof.

Application for PAN Card for NRI

NRIs are required to apply through the NSDL (Protean) portal to receive a PAN through Form 49AA, a form specifically introduced for foreign citizens and non-residents. Indian embassies, consulates, apostille authorities, or overseas banks that are controlled by local financial authorities can attest to the documents submitted.

NRI PAN Card Fees

Depending on the address of the postal services, the fees will differ -

• Foreign address: ₹1,011

• Indian address: ₹72 (plus GST)

Delivery times vary based on international postal networks.

PAN Card for NRI Documents Required

The documents that are accepted to identify, address, and prove citizenship are -

• Passport

• OCI card

• Visa documents

• Foreign residence permits

• Overseas bank statements

• Utility bills

These certificates should be consistent with the attestation and verification requirements of NSDL.

• Identity proofs: NRIs are required to provide their passport, OCI card, or foreign citizenship ID to verify identity. In the event of issuance outside India, these documents have to be certified in accordance with NSDL requirements.

• Address proof abroad: Foreign address evidence would consist of bank statements, utility bills, residence permits, or notarised overseas address confirmations. These enable the NRIs to retain PAN communication beyond India.

• For an Indian address, Indian address documents are necessary in the event that the applicant chooses an Indian communication address. This may be Aadhaar (in case of eligible residents), utility bills, or Indian bank statements.

While applying for a new PAN, NRIs may give either an Indian or a foreign address. However, if you use an Indian address, there may be a residency mismatch. Applying using a foreign address is more appropriate for compliance, even though it incurs a higher PAN fee. 

Aadhaar OTP Issues Abroad

• Foreign mobile numbers don't receive Aadhaar OTPs often.

• UIDAI supports email OTPs for login purposes as well as for updates such as a change of demographic or reprints.

PAN Correction from Abroad

• NRIs can correct PAN using the Correction (CSF) form.

• Embassy or notary attestation makes the process remote-friendly; No need to visit India.

Conclusion 

Most activities of NRIs do not require Aadhaar, but PAN is indispensable for almost all financial, tax, and investment transactions in India. NRIs are not required to link their PAN with Aadhaar. However, if NRIs already hold an Aadhaar, they can link both if they want. It’s mandatory for NRIs to report their NRI status properly. When NRIs return to India and become residents, they must take measures to link their PAN with Aadhaar. 

FAQs

Is Aadhaar compulsory for NRIs?

No. An NRI can get an Aadhaar card if they want, but it is not compulsory. However, since biometrics is involved for Aadhaar applications, NRIs must be in India when they apply for Aadhaar. 

Do NRIs need to link PAN with Aadhaar?

No, NRIs don’t need PAN Aadhaar linking as long as they are non-residents and have not been classified as residents in PAN records. The linking requirement is only for residents. 

What to do if an NRI already has Aadhaar?

If an NRI already has Aadhaar, they can link it with PAN, but as long as they are an NRI, this is not a mandatory requirement. Linking will become mandatory only when they become a resident again. 

Will my PAN become inoperative if I don’t link it with Aadhaar?

No, your PAN will stay active if you are a non-resident and didn’t link it with Aadhaar.