Permanent Account Number or PAN (as it is commonly called), was a measure taken by the Indian Government. The purpose was to identify various taxpayers in the country. PAN is a unique 10-digit identification number assigned to Indians, who indulge in any kind of financial activity. The system of identification, under PAN, is a computer-based system that assigns a unique identification number to every Indian entity to be used for ITR Filing.
With this method, all financial activities of a person or business entity, are recorded against a single PAN number which acts as the primary key for storage of information. It is shared across the country. No two people can have the same PAN.
Aadhaar is a 12-digit unique identification number assigned to Indian citizens by the Central government. It is operated and managed by the Unique Identification Authority of India (UIDAI). Aadhaar card is essentially an identification document issued after recording and verifying every resident Indian citizen’s details including biometric and demographic data. Aadhaar was not meant to replace existing ID proofs like PAN, passport, driving license, etc. However, it can be used as a single ID proof. You can use it for a Know-Your-Customer (KYC) verification with Banks, financial institutions and telecom companies, etc.
The Supreme Court (SC) has said that Aadhaar is a must to file income tax returns (ITR) and to apply for a new PAN.
According to the Central Board of Direct Taxes (CBDT) press release dated March 31, 2019, the deadline to link PAN with Aadhaar has been extended to September 30, 2019. Also, from April 1, 2019, it was made mandatory to quote and link Aadhaar number while filing an income tax return (ITR) unless specifically exempted.
For all those Resident Indians, this essential requirement is quite clear and, therefore, easy to follow. But what about NRIs? Should NRIs get their Aadhaar linked with their PAN Card and, thereby, their Bank Accounts?
Guidelines for NRIs to get Aadhaar Card
If you are an NRI, you may not have an Aadhaar Card. According to the official website of UIDAI, “only a resident Indian is entitled to obtain Aadhaar.”
Accordingly, the necessity to quote Aadhaar Number as per section 139AA of the Income-tax Act shall not apply to an individual who is not a resident as per the Aadhaar Act, 2016.
The above statement was true until July 4th, 2019. Till then, as per the government guidelines, NRIs did not have to link their Aadhaar for banking, mobile, PAN and other services. Because the government had made it necessary for all Indian citizens to enroll in the Aadhaar Yojna. Moreover, filing details of the Aadhaar number while submitting Income Tax returns from July 2017 onwards did not apply to NRIs.
Eligibility Rules for NRIs
Aadhaar Act of 2016 explains the resident as an individual who has been living in the country for 182 days or more in the year immediately preceding the date of application for enrolment.
Therefore, if an NRI has resided in the country for 182 days or more, in the last 1-year, before the date of application for enrolment, then the NRI can apply for an Aadhaar card. So if you have not lived in the country for at least 182 days in the last 12 months. Even though you are a citizen of India, you are not eligible to avail of Aadhaar. You will have to, first, complete 182 days of stay in India (in the last one year immediately preceding the date of application for enrolment) to apply for Aadhaar.
The process is simple and does not involve complex paperwork.
- Aadhaar is only for residents of India. NRIs are not eligible to get Aadhaar.
- The service providers such as mobile companies, etc. have themselves laid down exemptions specific to NRIs.
- NRIs should simply advise these service providers that they are not required to provide Aadhaar numbers as per UIDAI/OCI, being NRIs.
- Banks, Credit Card companies, etc had earlier been exempting NRIs from linking their Aadhaar earlier. Though now things have changed.
Changes as per the Union Budget 2019
All the above guidelines applied until the recent budget was presented, during which the Finance Minister Nirmala Sitharaman has proposed that NRIs holding Indian Passport will get Aadhaar card quickly; and they do not need to wait for the mandatory 180 days.
She announced, during the budget, to issue Aadhaar card to those NRIs who are holding Indian passports after they arrive in India. Before this, it took at least 180 days to get Aadhaar card to NRIs.
This announcement will facilitate NRIs in getting KYC done quickly and use it for facilitating financial transactions within India. The issuance of quick Aadhaar to NRIs may allow them to use the card number at the time of ITR Filing also.
- If you are an NRI and you don’t have an Aadhaar, you don’t have to apply for one. Simply because you are not eligible for it. This exemption ends here itself.
- However, you need to hold a PAN Card if you have taxable income in India.
- And, since the PAN has to be invariably linked with Aadhaar for all financial transactions, therefore, those NRIs having income sources in the country, must get registered.
- This move is expected to increase NRI transactions and, thereby, investments in the Indian market.
Also, if you already have an Aadhaar Card, you must link it with your PAN.
What if I already had Aadhaar Card? I became NRI later
It is a very valid case. You could already have an Aadhaar before you went and resided abroad. Or it is even possible to not know about the 182 days clause and you have already applied for an Aadhaar. You don’t need to panic in such a situation!
You can continue to keep your Aadhaar Card for the time being. However, to comply with the latest legal regulations, you need to get it linked with your PAN.
How to link Aadhaar with PAN
To link your Aadhaar with your PAN, you can use the online facility launched by the Income Tax Department. The easiest way to link them, it is a simple 2-step process to undertake.
Go to the Income Tax Government Portal www.incometaxindiaefiling.gov.in. Click on “Link Aadhaar”, visible on the left side of the window.
Provide the details about your PAN and Aadhaar. Enter the number and name exactly matching to that in your Aadhaar Card. No spelling mistakes.
Enter the CAPTCHA code visible on the screen.
Press “Link Aadhaar” Button.
Once UIDAI has verified the details, the linking will be confirmed. You will be shown a confirmation message on the window below.
Please ensure that your Date of Birth, Name, and Gender in both PAN and Aadhaar are exactly the same. If any minor mismatch is there, Aadhaar OTP will be required.
In a far-off possibility, when the name is completely different in both the Cards, the linking will fail and you will be prompted to get your name changed in either your Aadhaar or PAN database.
Another option to process the linking is also provided here. Login to your dashboard on the website by entering PAN (User ID), password and your Date of Birth. Once logged in, you need to click on the “Profile Settings” tab and select the last option “Link Aadhaar”.
The Government has given one more option to link both the Cards. By using SMS. Send a message to 567678 or 56161 from your registered mobile number. The format is as below:
- UIDPAN<12-Digit Aadhaar Number><10-Digit PAN Number>
- For example UIDPAN 123456789123 ALPKM2122M
If you have done linking via any of the 3 methods provided above, you do not need to do it again.
The Purpose of Linking PAN and Aadhaar
By linking the PAN and the Aadhaar cards, the government would be able to keep a tab on all the financial transactions of a particular individual or a business entity.
This will effectively remove all possibilities of tax evasion. The linking, it is hoped, will weed out false PANs from the system. Many individuals and entities have found to be in possession of multiple PAN Cards, to defraud the government and avoid paying taxes.
Not only that, the linking would allow seamless verification of data entered in PAN applications.
If you are an NRI and you don’t have an Aadhaar, you don’t have to apply for one. Due to the reason that you were not eligible for it, as per earlier regulations.
Up till now, that is.
Now, after the budgetary declarations. And considering most of you would have some kind of taxable income or investments in India. NRIs having Indian passports could get an Aadhaar card upon their arrival in India, as per the proposal.
This article is written by Reema. A content writer at LegalRaasta.The leading firm of India, providing all assistance related to ITR Filing, GST Registration, Company Registration, and much more.
Originally published on 17 July 2017, Content updated on 20 July 2019