What Is A PAN Card? 

According to the Income Tax Act, of 1961, the Permanent Account Number (PAN) is a ten-character alphabet identifier issued by the Income Tax Department of India, in a laminated card. 

Section 139AA of the Income Tax Act, 1961 requires every person, who is eligible to obtain an Aadhaar number to: 

  • Quote Aadhar in PAN application form 
  • Quote Aadhar in Indian Income Tax Return 

PAN enables the Income Tax Department to link all the transactions of the person with the department. These transactions include payments, TDS/TCS credits, returns of income etc. 

The first three characters run from the series from AAA to ZZZ. 

The fourth character of PAN represents the status of the PAN Holder. P stands for individual, F for Firm, C for Company, H for HUF, A for AOP, T for Trust 

The fifth character stands for the first character of the PAN holder’s last name/surname

The next four characters are sequential numbers running from 0001 to 9999

The last character is an alphabetic check digit. 

Importance Of PAN Card

PAN card has been mandatory from 1st January 2005. The following are some of the reasons why a PAN Card is necessary: 

  1. To sell or purchase an immovable property valued at 5 lakhs or more 
  2. Sale or purchase of a motor vehicle
  3. Opening a bank account 
  4. Making an application for telephonic connection 
  5. Payment to hotels and restaurants against bills exceeding 25,000/- rupees at one time.

Can NRI Apply For A PAN Card?

Anyone who earns income has to apply for a PAN Card to file an income tax return. A PAN Card is compulsory for an NRI Individual only if he/she has a source of income in India whether from property rent, mutual fund returns etc. An Aadhar Card is not necessary for the application of a PAN Card. 

NRIs Who Are Exempted

According to the Income Tax Department notification, dated 11th May 2017, the following category of NRI is exempted from applying for PAN Card: 

  1. Residents of Assam, Jammu and Kashmir and Meghalaya 
  2. Non-residents as per Income Tax Act, 1961 
  3. Anyone of the age of 80 years or more at any time during the previous financial year 
  4. Not a citizen of India

Advantages Of PAN Card: 

  1. For filing of tax returns- It will be easier for the NRI resident to file tax returns. 
  2. Registration of Business- it is compulsory for businesses to have PAN cards while their registration 
  3. For conducting financial transactions- A host of financial transactions can be done only if the PAN card of the individual is available. 
  4. Opening a bank account

Is It Mandatory For NRIs To Apply For A PAN Card?

Yes, it is mandatory for the NRI is apply for a PAN Card if he/she wants to: 

  1. Buy high-value assets in India 
  2. Want to make a transaction above Rs. 50,000
  3. Take a loan from a bank in India. 
  4. The TCS/TDS may be higher in rate. 

How Can An NRI Apply For A PAN Card? 

  1. An NRI can apply for a PAN card online even if he is not physically available. NRI have to fill in form 49A if they have Indian Citizenship or else in case of citizenship of another country form 49AA has to be filed. 
  2. The Application can be made through either the portal of NSDL or the Portal of UTIITSL. 
  3. After that, an acknowledgement copy along with a 15-digit number is generated. 
  4. The requisite fees have to be paid. 

Apart from this process, there are various documents required: 

  1. 2 passport-size photographs 
  2. A copy of the passport 
  3. A copy of the bank statement 
  4. Copy of NRE Bank account statement duly attested with at least two transactions in last month 

Fees For The Application

  1. Firstly fee for the application has to be paid which is approximately 1,020/- rupees. 
  2. Additional Charges- for conversion charges 
  3. Re-application fee- if due to any mistake, the fees have to be re-filed 
  4. Update or correction fee- If any changes have to be made in the application, it is generally 1,020/- Rupees. 

Binoy Viswam V. Union Of India & Ors (2017) 7 SCC 59

In this case, the constitutional validity of Section 139AA of the Income Tax Act, 1961 was challenged, which made the Linkage of IT returns mandatory with an Aadhaar card.  The Petitioners argued that in case of failure to intimate the Aadhar Number, the PAN allotted to such persons would become invalid not only from July 01, 2017, but from its inception. 

The court held that 

  1. Section 139AA of the Income Tax Act is not violative of Articles 14 and 19(1(g) of the Constitution. 
  2. No conflict between the provisions of the Aadhar act and Section 139AA of the income tax act. 
  3. The Bench has made it clear that those who do not have Aadhar Card need not apply for it for filing of IT returns. 
  4. Section 139AA does not have a retrospective effect. 

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