Can PAN Be Used to Report Foreign Holdings in India

Yes, PAN (Permanent Account Number) is an essential identifier for reporting foreign holdings in India. It is used when individuals and entities declare foreign assets, bank accounts, or financial interests in their Income Tax Returns (ITRs) under the Income Tax Act, particularly in the Schedule FA.

• PAN Requirement for Declaring Foreign Assets

• Resident individuals (ROR) are required to report foreign holdings if they own or benefit from foreign assets.

• PAN is mandatory to file ITR-2 or ITR-3, where foreign assets and income are disclosed.

• The declaration must include foreign bank accounts, investments, immovable property, and trusts.

• PAN links these declarations to the taxpayer’s identity for audit and verification.

• Schedule FA: The Reporting Format

• Schedule FA (Foreign Assets) is a section in the ITR specifically for foreign holdings.

• It includes detailed disclosure of country, asset type, account number, peak balance, and income.

• PAN must be mentioned to correlate the declared foreign income and asset ownership.

• Inaccurate or omitted information under Schedule FA may trigger penalties under the Black Money Act.

• PAN Use in Global Information Exchange

• India receives foreign asset data through Automatic Exchange of Information (AEOI) agreements.

• This information is matched with PAN-linked income tax records to identify undeclared assets.

• PAN helps authorities trace offshore bank accounts and investments held by Indian residents.

• PAN ensures taxpayer accountability under both domestic and international tax frameworks.

• Legal Obligations and Exemptions

• Only individuals who qualify as resident and ordinarily resident (ROR) are required to report foreign holdings.

• Non-residents (NRI) and RNOR individuals are exempt from Schedule FA disclosure.

• PAN still plays a role for NRIs reporting Indian income or claiming TDS refunds.

• Filing incorrect returns or under-reporting PAN-linked foreign income may result in severe penalties and prosecution.

• Best Practices for PAN Holders with Foreign Assets

• Ensure you report all foreign assets and income annually if you qualify as ROR.

• Match PAN-linked disclosures with your foreign bank statements and investments.

• Retain documents like foreign tax returns and interest certificates to support Schedule FA entries.

• Seek professional help if unsure about reporting thresholds or asset classifications.