Permanent Account Number (PAN)

A PAN is a unique 10-digit alphanumeric number issued by the Income Tax Department, processed through UTIITSL or NSDL e-Governance. Once allotted, it is permanent, it never changes even if your name, address, or assessing officer changes. You get it either as a physical laminated card by post, or as an e-PAN delivered to your registered email.

Where PAN is mandatory

Opening a bank account, opening a demat account, investing in IPOs, mutual funds, or portfolio management schemes, buying or selling immovable property, and filing your return of income or paying tax, all require PAN. A longer list of specific transactions sits under Rule 114B of the Income Tax Rules, worth checking if you are doing something less routine.

Documents needed to apply

Category	Identity Proof	Address Proof
Indian citizen, PAN delivered in India	Aadhaar card (mandatory)	Aadhaar, Elector’s card, Passport, or a recent bank statement
Indian citizen, PAN delivered abroad	Aadhaar, Elector’s card, or Passport	NRE or foreign bank account statement (recent month)
Foreign citizen, PAN delivered in India	Passport	Aadhaar (if available), NRO/NRE statement showing Indian address, or a representative assessee’s address
Foreign citizen, PAN delivered abroad	Passport	OCI card, or NRE/foreign bank account statement

Why NRIs specifically need to hold PAN

Without PAN, whoever pays you Indian income withholds tax at the highest of: 20%, the rate specified for that income under the Act, or the rate in force (Finance Act rates or your DTAA rate, whichever applies). Quoting your PAN to the payer avoids this inflated withholding entirely.

PAN is also what lets you actually claim back any excess tax deducted, by filing your return of income for that year. To file, your PAN needs to be registered on the income tax e-filing portal. Alternatively, the department allows a relaxation where you can provide your details directly to the payer to avoid the higher deduction in the first place, without waiting for a refund cycle.

Why PAN sometimes shows as inoperative

Many NRIs find their PAN flagged as inoperative because it is not linked to Aadhaar. NRIs are not actually required to obtain Aadhaar or link it to their PAN at all, this flag arises simply because your NRI status was never formally communicated to the tax department. The fix is to inform the department of your NRI status through the e-filing portal, not to obtain an Aadhaar card you don’t need.

Why refunds sometimes get restricted on the e-filing portal

A restricted refund flag usually comes down to a name mismatch between your PAN and your bank records, spelling differences, a shortened name, or an outdated surname. The fix is to make sure your name reads identically across your passport, bank statements, and PAN card, mismatches here are one of the most common and most avoidable reasons refunds get stuck.