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PAN, KYC & Identity

Your residential status changed: every record you have to update

Nobody hands you a list. Your status changes on a date, and then a dozen separate records have to be told, each by you, each in its own way.

Changing residential status is not one form. It is a date, and then a scatter of records that all have to be brought into line with it: your PAN, your standing status on the tax portal, your bank accounts, your demat, your KYC with fund houses, and everyone who deducts tax on your Indian income. Nobody tells you the list. Each institution assumes another one has handled it, and most of them only find out years later during a re-KYC sweep, which is the point at which an account gets frozen or tax starts coming out at the wrong rate. The order matters too, because some of these steps depend on the one before. This page is the map. Each item says what to do and what breaks if you skip it, and links to the page that covers it properly.
Last reviewed: 10 August 20269 min readReviewed by Preetesh Maloo, CA

The short answer

Work through it in this order, whichever direction you are moving. First settle the date and the status itself, because everything else hangs off it. Then fix PAN and the tax portal, because your PAN record is what the banks and the tax system both read. Then the money: bank accounts, then demat, then KYC with fund houses. Then tell everyone who deducts tax on your Indian income, so the rate they apply matches your new status. If you are leaving India, the whole list is easier to do before you go. If you have come back, the bank step has the tightest timing, generally around 30 days from becoming resident under FEMA.

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Start with the date, not the paperwork

Before you change anything, settle what your status actually is for the year you moved, because every other step is dated from it and a wrong date makes the rest wrong too.

Settle it from your actual days in India under Section 6, then test whether you qualify as Resident but Not Ordinarily Resident under Section 6(6). That is what decides whether India taxes only your Indian income or your worldwide income. Get it wrong and you either overpay on foreign income India never had a claim on, or under-report income it did.

The full version, including how the year of the move is split: Your residential status in the year you move.

PAN, and the status the tax system reads

Your PAN record is what the banks and the tax system both read, so it comes before the money steps.

If you have taken a foreign passport or hold an OCI or PIO card and have never had a PAN, apply for a fresh one on Form 49AA, not the resident Form 49A, and get any foreign document apostilled or attested by an Indian embassy first. Without a PAN, tax on your Indian interest, rent or property sale is withheld at 20% under Section 206AA, and you cannot file a return, claim a refund or apply your treaty rate. See PAN on a foreign passport.

If you already have a PAN, put your non-resident status on record, either by filing a return as a non-resident or by intimating your jurisdictional assessing officer with proof. The Aadhaar-linking exemption is not applied to your PAN automatically. With nothing on record the system still reads you as a resident who did not link, so your PAN is flagged inoperative, tax is deducted at 20% or the rate in force, whichever is higher, and refunds can be held back. See PAN inoperative and the 20% deduction.

The tax portal, and which officer holds your file

On the e-filing portal open My Profile and change your standing residential status to non-resident with your overseas address current. Then ask the assessing officer who currently holds your PAN to migrate it to the international-taxation circle.

If it still reads resident, your PAN can be flagged inoperative for Aadhaar non-linking and tax cut at 20%, your case sits with a local officer instead of the international-taxation circle, and bank KYC or refunds stall because the records disagree.

The step-by-step, including the jurisdiction migration: Updating your residential status on the tax portal.

Bank accounts, in whichever direction you are moving

This is the step people leave longest and it is the one that freezes.

If you have become a non-resident: have the bank redesignate your old resident savings or current account as an NRO account from the date you became a non-resident, and open a fresh NRE for foreign earnings. Leave it and the bank's re-KYC picks up your non-resident status and can freeze the account or put it under review, while interest keeps being deducted at the resident TDS rate instead of the non-resident one. See Resident account still running after you became an NRI.

If you have moved back to India: tell your bank within about 30 days of becoming a person resident in India under FEMA. Redesignate the NRE and NRO accounts to resident accounts, open an RFC to hold the foreign-currency balances, and let FCNR deposits run to maturity before converting them. Leaving an NRE account quietly running is a FEMA breach, and its interest exemption under Section 10(4) ends the day you become resident under FEMA, so the interest becomes taxable even while you are still RNOR. See Redesignating your accounts when you return.

Demat and trading, which is not the same as the bank

The demat is a separate conversion and it is routinely missed, because people assume telling the bank covers it.

Convert to an NRI demat and trading account: move your resident-era shares to an NRO-linked demat by off-market transfer, which does not mean selling them, set up an NRE route for future repatriable investing, and close the resident demat.

Continuing to hold and trade on the resident demat is a FEMA contravention, and it means your gains have been reported and taxed as a resident's rather than an NRI's. The full conversion: Converting a resident demat and trading account.

If you have not left yet, do the whole list first

Every step above is easier before you go, because you still have Indian address proof, a working Indian phone and a branch you can walk into.

Before you leave, get your resident savings and current accounts redesignated to NRO, open an NRE (and FCNR if it suits you) for money you earn abroad, update your PAN and bank KYC to non-resident, and tell everyone who deducts tax on your Indian income, your bank, your tenant, your fund houses, so TDS is applied at non-resident rates.

Left until after you have gone, it turns into frozen accounts, wrong TDS and a residential status flip you cannot pin down, and running a resident account once you are a non-resident is a FEMA compliance breach. The pre-departure version: Before you leave India.

What's involved

What the CA actually does

  1. 1

    We pin down the date and the status

    Everything on this list is dated from the day your status changed, so a CA settles that first from your actual days in India under Section 6, and tests Section 6(6) for RNOR. That single answer decides what India can tax and which version of each step below applies to you.

  2. 2

    We fix the records the system reads

    PAN and the standing residential status on the e-filing portal come next, because the banks and the tax system both read them. We lodge the correction, and where the file still sits with a local officer we take up the migration to the international-taxation circle.

  3. 3

    We work the list with you, in order

    Bank accounts, then demat, then KYC with the fund houses, then everyone who deducts tax on your Indian income. Each one has its own form and its own failure, and we do them in the order that stops the later steps bouncing.

References on this page

  • Section 6 decides your residential status for a year, and Section 6(6) decides whether you are Resident but Not Ordinarily Resident
  • Form 49AA is the PAN application for a foreign-passport, OCI or PIO applicant, replaced by Form 95 for a foreign individual and Form 96 for a foreign entity from 1 April 2026
  • Section 206AA: without a PAN, tax on Indian income is withheld at 20%
  • Rule 114AAA: a PAN not linked to Aadhaar is flagged inoperative, and the non-resident exemption is not applied automatically
  • Section 10(4): the NRE interest exemption ends the day you become a person resident in India under FEMA
  • Holding a resident bank or demat account after becoming a non-resident is a FEMA contravention

Frequently asked questions

Common questions

No, and this is the one people miss. The demat is a separate conversion: resident-era shares move to an NRO-linked demat by off-market transfer, which does not mean selling them, and the resident demat is closed. Continuing to hold and trade on the resident demat is a FEMA contravention, and it means your gains have been reported and taxed as a resident's rather than an NRI's.

No. Most of this is fixable after the fact, it is just slower and it usually surfaces as a problem first, when a re-KYC sweep freezes an account or your PAN turns up inoperative and tax starts coming out at 20%. Work the list in the same order: status and date first, then PAN and the portal, then the accounts.

The bank one. Tell your bank within about 30 days of becoming a person resident in India under FEMA, redesignate the NRE and NRO accounts, and open an RFC for the foreign-currency balances. The NRE interest exemption under Section 10(4) ends the day you become resident under FEMA, so interest becomes taxable even while you are still RNOR.

The exceptions that change the answer

Where the general rule stops applying to you

Every rule below has a carve-out, a cut-off date or a condition that flips the answer. These are the ones that decide real cases.

Inoperative PAN: what breaks

Right now: TDS at 20% or higher under s.206AA, refunds withheld, and no interest on the withheld refund

Where it works differently

The holder is an NRI
NRIs are EXEMPT from Aadhaar linking. PANs have nonetheless been made inoperative in bulk where the department's records still show resident status.
The fix is to get the residential status updated with the jurisdictional AO, not to obtain an Aadhaar.
A refund is pending
It is withheld while the PAN is inoperative, and no s.244A interest accrues for that period.
Rule 114AAA.

Commonly got wrong

  • An NRI must link Aadhaar to keep their PAN operative. NRIs are exempt. The problem is a stale residential status on the department's record.NRIs are exempt from Aadhaar linking. If your PAN shows inoperative, get your residential status corrected with the AO. Do not apply for an Aadhaar.

Primary residence test: days in India

Right now: 182 days

Where it works differently

The person is an Indian citizen leaving India for employment abroad, or as a crew member of an Indian ship
Only the 182-day test applies. The 60-day secondary test is disabled.
Explanation 1(a) to s.6(1)
Counting days
The day of arrival AND the day of departure both count as days in India.
Settled administrative practice; partial days count as whole days.
The financial year straddles a move
Residence is decided for the WHOLE financial year, not from the date of the move. India has no split-year concept, unlike the UK.
s.6 is a full-year test.

Commonly got wrong

  • You become an NRI the day you leave India. True for FEMA, false for income tax. Under FEMA residence changes on departure with intent; under the Income-tax Act it is a full-year day count.Name which law you mean. Say 'non-resident under FEMA from the day you leave' or 'non-resident for income tax if you are in India under 182 days in that financial year'.
  • India has split-year treatment. It does not. Only the treaty tie-breaker resolves a dual-residence year.Point to Article 4 of the relevant DTAA.

RNOR qualification tests

Right now: Non-resident in 9 of the 10 preceding years, OR in India for 729 days or less in the 7 preceding years

Where it works differently

A long-term NRI returns to India permanently
Typically RNOR for two financial years, sometimes three depending on the return date and prior visits.
Both limbs are tested each year; the exact count depends on actual travel history.
The NRI visited India frequently while abroad
RNOR may last only one year, or not apply at all.
The 729-day limb is cumulative across seven years.

Commonly got wrong

  • RNOR always lasts three years. It depends on actual day counts. Two years is the common case; three is not automatic.Say 'usually two years, sometimes three, depending on your travel history', and compute it.
  • RNOR status exempts NRE interest. NRE exemption is tied to FEMA non-residence, which usually ends on permanent return, before RNOR does.Separate the two: RNOR covers foreign income; NRE exemption ends with FEMA residence.

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