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From July 1, 2023, the mutual fund industry has been facing temporary disruption due to implementation of inoperability of MF folios without PAN Aadhaar linkage.
Remember that June 30, 2023 was the last date to link PAN with Aadhaar. Individual who did not link the two by this date, will have their PAN becoming inoperative. As a result, they cannot continue to do financial transactions.
In mutual funds, AMFI has clarified investors with inoperative PAN cannot execute fresh transaction including SIP, STP and SWP. Such investors cannot redeem their money from mutual funds. Further, their dividend payout will go to unclaimed funds.
While resident individual will have to link the two to get their MF account operational, there are certain categories of investors who are exempted from linking Aadhaar and PAN.
According to income tax norms, NRIs have been exempted from PAN and Aadhaar linking i.e. they are not required to link the two. Similarly, individuals staying in Assam, Meghalaya and the Union Territory of Jammu and Kashmir are exempted from linking Aadhaar and PAN. Further, super senior citizen who have turned 80 years of age in the previous financial year are no longer required to link the two.
Many distributors told Cafemutual that MF transactions of many of their NRI clients have been disrupted due to non-linkage of PAN and Aadhaar.
However, MF investors who have invested in mutual funds with their PAN and later relocated to other geographies or falling under exemption list are also not allowed to do financial or non-financial transaction in mutual funds until they change their residential status with the income tax department.
Your NRI clients can update their status with income tax by following these steps:
- Visit the income tax e-filing portal
- Visit “My Profile” section
- Under contact details, change your residential status to non-resident
Do write to us if you face other such issues at nishant@cafemutual.com.
