Do NRI’s Require Pan Card to Sell Property in India?

Pan Card for Sell Property in India

Property is an important resource, and for ages, it has been an exceptionally time-consuming and taxing process to sell property in India from overseas. One faces procedural difficulties only due to the dearth of accurate information regarding the process. But in order to encourage greater investment in the real estate sector, the Indian Government has simplified the field of real estate for NRI’s.

PAN or Permanent Account Number has essentially been created in order to regulate and track taxable income in India. This unique ten-digit code is required by NRI’s only when they have a taxable source of income in India.

Due to the huge amount of diaspora abroad, India has started schemes such as Overseas Citizenship of India (OCI) and Person of Indian Origin (PIO) schemes. In order to enter into a property transaction, it is not necessary for an NRI or a PIO (origin being dated up to the fourth generation of ancestry) to have a PAN card. However, if the sale proceeds that an NRI has received have to be repatriated, i.e. if the money has to be sent back to ones home country, an NRI is supposed to require a PAN card for the same. The facility of remitting the proceeds that have been acquired from the sale of property is not available to citizens of Iran, China, Nepal, Bhutan, Pakistan, Afghanistan, Bangladesh and Sri Lanka. Individuals not required to possess a PAN card and are exempted from the same can make a declaration in Form 60 when partaking transactions that require it. Even though a PAN card is not a compulsion, most experts suggest that it is advisable to apply for the same since it is of great aid in order to claim tax exemption after the sale of the property.

Checklist of documents for selling property in India

Hence, the standard document checklist for selling property, apart from the state-specific documentation requirement is as follows –

  • Passport, to act as a proof of identity (doesn’t necessarily have to be an Indian passport);
  • PAN card, or form 60, for the purpose of tax exemptions
  • Address Proof
  • Allotment Letter which was initially provided by the developer;
  • Sale Deed
  • Tax Returns, if an income is accruing from the property and the same is taxable, tax returns for the period should be maintained
  • No Objection certificate and other society related documentation
  • Encumbrance Certificate
  • POI or OCI Card.

Should we link Aadhaar card with the PAN card?

Should we link Aadhaar card with the PAN card

The Aadhaar card is a Unique Identification that collects the biometric data of the user and gives a 12 digit unique number to them. The operation is looked after by the Unique Identification Authority of India (UIDAI). On the other hand, PAN which is short for Permanent Account Number is issued by an Assessing Officer of the Income Tax Department, which is used for all correspondence with the income tax authority and is mandatory to mention it in case of any electronic or financial transactions.

The main objective of the government while linking the Aadhaar card and the PAN card was as follows:

  • The requirement of showing an acknowledgment slip to the IT department after filing an IT return is eliminated by this linking, which would save time and effort.
  • Multiple PAN card holders engaged in tax evasion and linking the two would help reduce this and also help in catching culprits of the same.
  • It will be easier for the government to track down our tax returns and transactions made, which would help to curb the problems of multiple PAN cards.

Moreover, this step of digitization would not only bring the country a step closer in drive of digitization by the government, but would also help in curbing corruption in the country. A number of petitions were filed in the Supreme Court against the Income Tax Act’s provisions that made it Aadhaar card mandatory for filing income tax returns and allotment of a PAN card. The Apex court said that such a thing cannot be made mandatory, however, those who have an Aadhaar card, must make details of the same available to the IT department.

The next question is how to link the Aadhaar card with the PAN card?

It can be done by visiting the official website of the Income Tax Department of India at www.incometaxindiaefiling.gov.in However, if that does not work, you can also send an SMS to 56161 or 567678 from your Registered Mobile Number (RMN) of Aadhaar card in the mentioned format:

UIDPAN<12 digit Aadhaar><10 digit PAN>

If you fail to link the two together, it is possible that you will not be able to file your Income Tax Returns after 1st July 2017. Also, as per the government notification, your PAN card might also be rendered invalid by December 2017. Moreover, if an individual does not have an Aadhaar card, they may apply for one and in the application for Income Tax Returns, show a proof of the same.

A number of debates have been going on about this issue and it is argued that such a linkage causes sensitive personal date such as biometric details etc to come out in the public domain where they can be easily accessed. Being compared to the concept of Social Security Number of the USA, the Aadhaar’s connection to a central database and access to sensitive date make the two very different.