In this guide
A PAN is an NRI’s primary Indian tax identifier, but holding one does not make you an Indian tax resident or automatically create an Indian tax liability. Residential status is determined under the tax residency rules, while PAN primarily identifies the taxpayer and connects financial transactions and tax compliance.
Here are seven PAN myths NRIs should understand in 2026.
Myth 1: Becoming an NRI Means You Need a New PAN
Wrong.
PAN is valid for the holder’s lifetime. A change of address or tax jurisdiction does not invalidate it.
Therefore, an Indian citizen who obtained PAN while resident and later becomes NRI should continue using the same PAN.
Obtaining multiple PANs can attract a ₹10,000 penalty under Section 272B, and any additional PAN should be surrendered.
Myth 2: Every NRI Must Have PAN
There is no blanket rule requiring every person living abroad to obtain PAN merely because they are an NRI.
PAN becomes important or mandatory where the person falls within Section 139A requirements or enters specified financial transactions requiring PAN. It is practically important for activities such as Indian tax filing, securities investments, property transactions and various financial dealings.
Certain non-residents can also receive specific relaxation from obtaining or quoting PAN when prescribed conditions are satisfied.
So the correct rule is:
NRI status alone does not create the PAN requirement, but Indian income and financial transactions frequently do.
Myth 3: An NRI Must Link PAN With Aadhaar
Not necessarily.
The Income Tax Department specifically lists a non-resident under the Income-tax Act among the categories exempt from compulsory PAN-Aadhaar linkage. The exemption also covers persons who are not Indian citizens, subject to the notified conditions.
This distinction matters because some NRIs discovered that their PAN had become inoperative after the Aadhaar-linking exercise even though they belonged to an exempt category.
An inoperative PAN can result in consequences including higher TDS/TCS and withholding of refunds.
However, inoperative does not mean the PAN has been cancelled or that you should apply for another PAN.
What Should an Exempt NRI Do if PAN Is Inoperative?
The Department has instructed affected NRIs to intimate their NRI status to the jurisdictional Assessing Officer with supporting documents.
Supporting evidence can include PAN and passport details establishing NRI status, OCI/PIO documentation or other prescribed foreign identification evidence.
Do not automatically pay the Aadhaar-linking fee merely because the PAN shows inoperative if you are genuinely covered by the NRI exemption. First establish why the PAN became inoperative and get the status corrected.
For PAN-related notices and compliance issues:
Myth 4: No PAN Always Means 20% TDS for an NRI
This is another oversimplification.
Section 206AA generally provides that where PAN is not furnished, TDS can apply at the higher of:
- The rate specified in the relevant provision;
- The rate or rates in force; or
- 20%.
However, Rule 37BC provides important relaxation for qualifying non-residents without PAN for specified payments such as interest, royalty, fees for technical services, dividends and transfer of capital assets when prescribed foreign-residency and identification documents are provided.
Therefore, an NRI should not assume either that PAN is irrelevant or that 20% TDS inevitably applies in every transaction.
Myth 5: Form 49A and Form 49AA Are Still the Current PAN Forms
This changed from 1 April 2026.
Under the Income Tax Rules, 2026, fresh PAN applications filed on or after 1 April 2026 use new form numbers:
| Applicant | Current PAN form |
|---|---|
| Individual who is an Indian citizen, including NRI | Form 93 |
| Individual who is not an Indian citizen | Form 95 |
| Indian non-individual entity | Form 94 |
| Foreign non-individual entity | Form 96 |
The Income Tax Department confirms that existing PANs remain valid; the new forms affect fresh applications rather than requiring existing PAN holders to reapply.
Thus, an Indian-passport-holding NRI generally falls under Form 93, while a foreign citizen, including an OCI who is no longer an Indian citizen, uses Form 95.
Myth 6: Aadhaar Is Always Mandatory for a New NRI PAN
Under the 2026 PAN rules, Aadhaar is generally mandatory except for exempt categories. The official PAN guidance expressly recognises the exemption framework. For NRI applicants, passport details are specifically required under the new rules.
This means an eligible NRI should not conclude that a PAN application is impossible merely because Aadhaar is unavailable.
From 1 April 2026, PAN applications can continue to be made through authorised PAN service providers, including Protean eGov and UTIITSL.
Myth 7: PAN Automatically Gives You DTAA Benefits
PAN helps with Indian tax compliance, but it does not by itself establish entitlement to a treaty rate.
DTAA relief depends on the relevant treaty and supporting tax-residency documentation. Also remember that Rule 37BC may relax Section 206AA for specified non-resident payments where the prescribed documents are supplied.
So PAN, residential status, treaty eligibility and TDS treatment should be analysed separately.
NRI PAN Checklist for 2026
Before your next Indian investment, property transaction or ITR:
- Verify that your existing PAN is operative.
- Never apply for a second PAN merely because status changed.
- Update outdated PAN particulars where necessary.
- Confirm your residential status each tax year.
- Check whether PAN-Aadhaar exemption applies to you.
- If PAN is wrongly inoperative, establish NRI status with the tax authorities.
- Furnish PAN or Rule 37BC documents to deductors where applicable.
- Use Form 93 or Form 95 for fresh applications after 1 April 2026, depending on citizenship.
Frequently Asked Questions
Does PAN expire when I become an NRI?
No. PAN is valid for life. Becoming non-resident does not require obtaining a new number.
Can an NRI hold two PANs?
No. Multiple PANs can attract a ₹10,000 penalty under Section 272B.
Is Aadhaar-PAN linking compulsory for every NRI?
No. Non-residents under the tax law are among the notified exempt categories, subject to the applicable conditions.
What if my exempt NRI PAN is showing inoperative?
Do not apply for a fresh PAN. Establish your NRI status with the jurisdictional tax authority and seek correction of the PAN status with supporting documents.
Which PAN form should an Indian NRI use in 2026?
For fresh applications from 1 April 2026, an Indian citizen—including an NRI—uses Form 93. A non-citizen individual uses Form 95.
Does not having PAN always mean 20% TDS?
No. Section 206AA contains the higher-rate rule, but Rule 37BC provides relaxation for specified payments to qualifying non-residents who furnish prescribed documentation.
