PAN services we provide for Non-Residents
Our team assists Non-Residents in obtaining PAN (Permanent Account Number), applying for PAN corrections, and PAN surrender, along with other Income Tax matters.
Some of the basic questions with respect to PAN of the ‘Non-Resident Indian’ are discussed below.
How to determine that an individual is an NRI?
‘Non-Resident Indian’ is an individual who is a citizen of India or a person of Indian origin and who is not a resident of India.
Thus, in order to determine whether an individual is a non-resident Indian or not, his residential status is required to be determined under Section 6.
As per Section 6 of the Income-tax Act, an individual is said to be non-resident in India if he is not a resident in India. An individual is deemed to be resident in India in any previous year if he satisfies any of the following conditions:
- If he is in India for a period of 182 days or more during the previous year; or
- If he is in India for a period of 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year.
However, condition No. 2 does not apply where an individual being a citizen of India or a person of Indian origin, who being outside India, comes on a visit to India during the previous year.
A person shall be deemed to be of Indian origin if he, or either of his parents or any of his grand-parents, was born in undivided India.
When a Non-Resident is required to obtain PAN
Every Non-Resident is required to obtain PAN if they fall into any of the following categories:
- Required to file or intend to file voluntarily, the Income Tax Returns.
- Whose total income during a financial year exceeds Rs. 2,50,000.
- Wish to carry out a transaction for which the quoting of PAN is compulsory as per Rule 114B of Income Tax Rules, 1962.
- Wishes to carry out any business whose turnover is likely to exceed Rs. 5 Lakhs.
- Person who is required to obtain “Import Export Code”.
- Person who is entitled to receive any sum / income after TDS.
What is the utility of PAN?
PAN enables the department to link all transactions of the assessee with the department. These transactions include tax payments, TDS / TCS credits, returns of income, specified transactions, correspondence and so on. It facilitates easy retrieval of information of the assessee and matching of various investments, borrowings and other business activities of the assessee.
A Permanent Account Number has been made compulsory for every transaction with the Income-tax Department. It is also mandatory for numerous other financial transactions such as the opening of bank accounts, deposit of cash in bank account, opening of DEMAT account, transaction of immovable properties, dealing in securities, etc. A PAN card is a valuable means of photo identification accepted by all Government and non-Government institutions in the country.
Further, if TDS is deducted or taxes are withheld by any entity for the income generated by Non-Residents in India, the excess amount after payment of income tax on the income generated by Non-Residents in India can be obtained as a refund after filing Income Tax Returns.
Is it mandatory to file return of income after getting PAN?
Return is to be filed only if you are liable to file return of income under Section 139. It is not mandatory to file return of income after getting PAN.
Transactions where quoting of PAN is mandatory
Following are the transactions in which quoting of PAN is mandatory by every person except the Central Government, the State Governments and the Consular Offices:
- Sale or purchase of a motor vehicle or vehicle other than two-wheeled vehicles.
- Opening an account (other than a time-deposit referred to at point 12 below and a Basic Savings Bank Deposit Account) with a banking company or a co-operative bank.
- Making an application for the issue of a credit or debit card.
- Opening of a Demat account with a depository, participant, custodian of securities or any other person with SEBI.
- Payment in cash of an amount exceeding Rs. 50,000 to a hotel or restaurant against bill at any one time.
- Payment in cash of an amount exceeding Rs. 50,000 in connection with travel to any foreign country or payment for purchase of any foreign currency at any one time.
- Payment of an amount exceeding Rs. 50,000 to a Mutual Fund for purchase of its units.
- Payment of an amount exceeding Rs. 50,000 to a company or an institution for acquiring debentures or bonds issued by it.
- Payment of an amount exceeding Rs. 50,000 to the Reserve Bank of India for acquiring bonds issued by it.
- Deposits of cash exceeding Rs. 50,000 during any one day with a banking company or a co-operative bank.
- Payment in cash for an amount exceeding Rs. 50,000 during any one day for purchase of bank drafts or pay orders or banker’s cheques from a banking company or a co-operative bank.
- A time deposit of amount exceeding Rs. 50,000 or aggregating to more than Rs. 5 lakhs during a financial year with:
- a banking company or a co-operative bank;
- a Post Office;
- a Nidhi referred to in Section 406 of the Companies Act, 2013; or
- a non-banking financial company.
- Payment in cash or by way of a bank draft or pay order or banker’s cheque of an amount aggregating to more than Rs. 50,000 in a financial year for one or more pre-paid payment instruments, as defined in the policy guidelines for issuance and operation of pre-paid payment instruments issued by Reserve Bank of India under Section 18 of the Payment and Settlement Systems Act, 2007, to a banking company or a co-operative bank or to any other company or institution.
- Payment of an amount aggregating to more than Rs. 50,000 in a financial year as life insurance premium to an insurer.
- A contract for sale or purchase of securities (other than shares) for amount exceeding Rs. 1 lakh per transaction.
- Sale or purchase, by any person, of shares of a company not listed in a recognised stock exchange for amount exceeding Rs. 1 lakh per transaction.
- Sale or purchase of any immovable property for an amount exceeding Rs. 10 lakh or valued by stamp valuation authority referred to in Section 50C of the Act at an amount exceeding ten lakh rupees.
- Sale or purchase of goods or services of any nature other than those specified above for an amount exceeding Rs. 2 lakh per transaction.
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