Permanent Account Number (PAN) is mandatory for many transactions now. As an NRI, you will require a PAN card for a broad range of operations that you may plan to do in India – Get a PAN card to investing in the stock markets, buy property, or get a credit card.
There are commonly two main questions that NRIs may have are:
- Is it necessary for NRIs to have a PAN card if touring India?
- If you hold a PAN card, do you need to file an income tax return in India?
Requirement to file a tax in India
- PAN card is necessary only if a person has income on which tax is payable in India.
- Only those individuals who have income that is over the tax-free allowance allowed is needed to file tax returns. Therefore, if you have taxable income in India, you should get a PAN card and file a tax return in India.
- Many people get PAN cards as they are usually required now to open bank accounts and is recognized as a form of identification in India.
Is PAN card compulsory for NRIs visiting India
PAN card is not mandatory for NRIs, PIOs or Foreigners visiting India. However, many NRIs who now hold foreign passports do get PAN cards, the same rules that apply to local Indian citizens, who reside in India, apply to Non-residents Indians.
Persons of Indian origin(PIOs) and foreigners visiting India may sometimes encounter a situation where they may be needed to get a PAN card. For example, when buying a motor car. When faced with such a situation, Non-residents can simply opt to fill in Form 60 which is an exemption from presenting a Pan and can be used by those who do not have a Pan card because they are non-residents.
Myths about PAN CARD
- PAN Card is one of the schemes of the Indian government to keep a record of and tax all their residents. This is not true. However, PAN card is not a scheme by the Indian government to keep an eye on residents. It is just an identification number(ID) like your Social Security Number in the United States or Social Insurance Number in Canada.
- While the social security numbers in Canada, as well as the USA, do not have photographs as an identity. The Indian PAN number is much more advanced and in fact a unique form of photo ID.
- There appears to be a misconception amongst people that once you get a PAN card, you need to file a tax return each year in India. This is not true. Tax filing is needed only if you have taxable earnings in India.
- Those who have taxable income in India must file a tax anyway. Not having a PAN card number does not indicate the person can avoid filling tax.
• NRIs holding bank accounts in India, already pay tax in the mode of TDS that is deducted by banks from your bank accounts. No tax returns require being filed for this type of income.