RIYADH, 11 July 2006 — Time is running out for non-resident Indians to get their Permanent Account Number, or PAN, from the country’s Income Tax Department.
This is perhaps something to consider for expat Indians in the Gulf region planning a trip home this summer.
It is particularly important for holders of dematerialized, or demat, accounts for transaction of securities. Persons who do not have their PAN by Sept. 30 will have their demat accounts frozen.
Without these demat accounts it has become virtually impossible to trade in shares. While there are middlemen who help investors in different, riskier ways, the investors who choose this route do not have ownership of the shares and their investments remain at the mercy and the quality of service provided by these proxy investors. The wisdom therefore lies in having one’s own demat account and PAN.
The condition applies to resident Indians as well, but non-resident Indians (NRIs) should pay special attention because most NRIs do not have PANs as they are not required to pay income tax in India for the money they earn working abroad. However, they are liable to pay for certain income earned in India through their domestic activities as per the country’s income tax laws, such as trading in securities.
After the deadline, many NRIs will find their domestic portfolios interrupted if they have not received a PAN.
The affected demat account holders will not be able transact in such accounts until the PAN is furnished and the account subsequently gets regularized.
In case of jointly held accounts, all account holders will have to have a PAN, including housewives or other family members.
The PAN has become necessary because of the new directive of the National Security Depository Limited (NSDL), which is the governing authority for demat accounts.
The PAN has become a must for undertaking any financial transaction back home as Indian tax officials seek to crack down on unregulated trading practices.
It is not difficult to get a PAN card; there are Indian tax offices across the country. Applicants fill out form 49A in black ink and send it to their agent or the tax department with necessary attachments.
It is more convenient and faster to work from a working Indian residency address. So the message to investors is: If you want to continue to trade in the Indian stock exchange, then you should act fast, get your PAN and furnish it to the bank that manages your demat account. Better sooner than later.