Rakesh (name changed), a project engineer in Dubai, called me in a panic last March. His bank had deducted Rs 1.9 lakh of TDS on an NRO deposit where he expected around Rs 60,000.
Nothing had changed in his deposit. Nothing had changed in the tax law either. His PAN had simply gone inoperative, and he had no idea.
He had held that PAN for eighteen years. He had an Aadhaar from his Bangalore days. And the tax department’s records still showed him as a resident.
⚡ Quick Answer
An NRI needs a PAN to file returns, invest in mutual funds or shares, and buy or sell property in India. Indian citizens apply on Form 49A; foreign citizens including OCI cardholders use Form 49AA. Cost is roughly Rs 1,017 for a physical card dispatched abroad and about Rs 72 for an e-PAN. The bigger risk is not applying, it is an existing PAN going inoperative because your non-resident status is not recorded with the tax department. That pushes TDS to 20% under Section 206AA.
Check – NRI Checklist: Going To Be An NRI?
Why you actually need a PAN as an NRI
Think of PAN as the number plate on your financial vehicle in India. Every transaction the tax system sees gets tagged to it. No plate, and the system assumes the worst about you.
You need one if any of this applies:
- You have Indian income above the filing threshold – rent, capital gains, NRO interest, a professional fee.
- You want to invest in mutual funds, shares or bonds. KYC does not complete without PAN.
- You are buying or selling property. Both sides need PAN, and the buyer needs yours to deposit TDS correctly.
- You want your TDS refunded. Refunds are credited only against an operative PAN.
You do not need a PAN if you have no Indian income and no Indian assets. Plenty of NRIs apply out of habit and then forget the account exists. That forgetting is exactly where the trouble starts.
The inoperative PAN problem nobody warned you about
Here is the rule as it stands. If you hold an Aadhaar and have not linked it to your PAN, the PAN becomes inoperative. Non-residents are exempt from that linking requirement. Sounds safe.
But the exemption is not automatic. It applies only if your residential status is actually recorded as Non-Resident in the department’s database. Most NRIs got their PAN as residents and never updated anything. The system does not know you moved.
So the PAN goes quiet. No email. No SMS. You find out when a bank deducts 20%.
An inoperative PAN means:
| What breaks | What it costs you |
|---|---|
| TDS on Indian income | 20% under Section 206AA, or the normal rate, whichever is higher |
| Refunds | Blocked. No interest paid on the held-up amount either |
| Mutual fund and demat transactions | Frozen. Purchases rejected, redemptions held |
| Property sale TDS | Buyer deducts at the higher rate, and you chase it for a year |
The fix is not a payment. It is a correction. You write to your Jurisdictional Assessing Officer with an intimation that your status is Non-Resident, supported by passport pages, visa or residence permit, and proof of days spent outside India. In practice this takes roughly 30 days. Find your AO on the income tax portal under Know Your AO.
One more change that catches people out. Since October 2024, an Aadhaar Enrolment ID is no longer accepted in PAN applications or in tax returns. If you were quoting an enrolment slip, that route is closed.
How to apply for a PAN card as an NRI
Two forms, and the difference is citizenship, not where you live.
| Who you are | Form |
|---|---|
| Indian passport holder living abroad (NRI) | Form 49A |
| Foreign citizen, including OCI cardholders | Form 49AA |
Apply online through Protean eGov (formerly NSDL) or UTIITSL. Fill the form, pay by card or net banking, and you get an acknowledgement number. If you are not using a fully paperless route, the signed acknowledgement plus documents must reach the processing office within 15 days.
Get your AO code right. A wrong AO code is the single most common reason NRI applications come back. International taxation circles handle non-residents. If you are unsure, use the portal’s AO search rather than guessing.
Documents you will be asked for
- Identity and date of birth: passport, which covers both for most NRIs
- Overseas address proof: passport, overseas bank statement, residence permit, visa, or a certificate from the Indian embassy
- Photographs: two recent passport size
- Foreign citizens: add a copy of the OCI card or the Certificate of Registration issued by Indian authorities
What it costs in 2026
An e-PAN delivered to your email costs about Rs 72. A physical card dispatched to an address outside India costs roughly Rs 1,017, because international courier is baked into the fee. Dispatch to an Indian address is far cheaper, around Rs 107.
The e-PAN is a valid PAN. For most NRIs it is the sensible choice. You are not going to hand a plastic card to anyone in Dubai.
What the 20% actually costs over a full year
Take an NRO deposit of Rs 60 lakh at around 7%. That is Rs 4.2 lakh of interest. Normal NRO TDS at 30% plus cess takes about Rs 1.31 lakh. Fine, you claim it back at filing. But an inoperative PAN blocks the refund entirely, so that Rs 1.31 lakh sits with the government while your return stays unprocessed. Across the cases I saw last year, the gap between discovering the problem and getting the refund ran close to eleven months. Nobody pays you interest on that money while it waits.
The damage is rarely the tax rate. It is the money that stops moving.
Why smart NRIs still let this slide
This is status quo bias doing its quiet work. Your PAN worked last year. It worked the year before. Nothing visibly broke, so the brain files it under “handled” and moves on.
The trouble is that an inoperative PAN is a silent failure. There is no red light on the dashboard. You learn about it through a deduction you did not expect, usually at the worst moment, when you are selling a flat or repatriating a maturity.
The people I work with are in their late forties and fifties, running teams, closing deals. They are not careless. They are optimised for problems that announce themselves. This one does not.
Spend twenty minutes. Log in to the income tax portal, check whether your PAN reads operative, and check what residential status is sitting against it. That is the whole task.
Must Read – Do NRIs Need To File Tax Returns In India?
Not sure whether your Indian paperwork still matches your actual status?
PAN, bank accounts, demat, KYC. One wrong record quietly taxes everything else.
Frequently asked questions
Do NRIs have to link PAN with Aadhaar?
No, if your residential status is recorded as Non-Resident with the income tax department. If it is not, the exemption will not protect you and the PAN goes inoperative.
I do not have an Aadhaar at all. Am I safe?
Largely yes, but only if the department’s record shows you as non-resident. The failure mode is the stale record, not the missing Aadhaar.
Can I use my foreign address on the PAN application?
Yes. NRIs can give an overseas correspondence address, and the card is dispatched there at the higher fee. An e-PAN avoids the dispatch cost entirely.
Is an e-PAN as valid as a physical card?
Yes. The PDF carries a QR code and is accepted everywhere the plastic card is.
I already have a PAN from my resident days. Do I need a new one?
No. Holding two PANs is an offence. You update the existing one and get your status corrected with your Assessing Officer.
How long does the AO intimation take to fix an inoperative PAN?
Roughly 30 days once the officer has your passport and stay evidence. Start it well before a property sale or a large redemption, not after.
Related – How Change in Residential Status Affects NRI Accounts and Aadhaar Card for NRIs
Rakesh got his money back. It took nine months, three visits by his brother to the AO’s office, and a sale that almost fell through.
A ten digit number you have not thought about in years is quietly deciding what your India money is worth.
💬 Your Turn
Have you checked your PAN status on the income tax portal in the last twelve months, or is it still sitting on the “I will do it next trip” list?
I need help with applying for a PAN card
Do you have to change your status as NRI for pan card
Is it mandatory for nri to link pan card to aadhaar card
I am an nri, currently living in australia would like to know the taxes applicable for crypto currency trading
I am a NRI living in the US. I left India 38 years ago when there was no PAN or Aadhar.
When I try to apply for a NRI PAN online (Form 49A on NDSL site), I cannot proceed without the Aadhar information being entered. What is the issue and what do I need to do?
I am sending money to my mother’s account in India to invest in mutual funds on my behalf. Will she be able to send me the money to the UK. The amount has become almost 1 crore Indian Rs.
Dear Amiya
No, you don’t need to change the PAN as status changes
I am an NRI and have a PAN card when I was resident. Does it require to apply for an NRI PAN card, changing the status from resident to non-resident? if yes, then as I am in the gulf, shall I again apply for a PAN card changing the status from non-resident to resident when I will return to India?
There are many NRI who had got their pancard issued long ago when they were residents. The pancard have their indian address and they have invested in bank account/ MF etc
They do not have Adhar card?
What happens to their pan card after the deadline to link wth adhar catd
Do NRIs need to have Aadhar card? Has anything changed considering the earlier guidelines did not press for Aadhar for NRIs?
Hi,
Till this date, it’s not compulsory for NRIs to have Aadhar.