India Eases PAN Application Rules for Foreign Portfolio Investors Under New Income-Tax Rules

(INDIA) — India eased PAN-related onboarding rules for Foreign Portfolio Investors after the Securities and Exchange Board of India and the Central Board of Direct Taxes addressed compliance problems created by the new Income-tax Rules, 2026.

SEBI issued Press Release No. 30/2026 on May 15, 2026, setting out practical flexibility for overseas funds completing the Common Application Form, or CAF, used for registration and tax identification. PAN remains central to the process because it links SEBI registration, bank account opening, demat account opening and market access.

SEBI said in the release: “In view of several difficulties expressed by concerned stakeholders in furnishing such information by FPIs, SEBI actively engaged with CBDT to facilitate continued ease of allotment of PAN to FPIs. The measures resonate with the continuous efforts towards providing ease of onboarding.”

The action followed complaints from FPIs that revised PAN application requirements had introduced fields many foreign entities could not easily complete. Those changes were notified on March 20, 2026 under the Income-tax Rules, 2026, which replaced Form 49AA with Forms 95 and 96.

Foreign Portfolio Investors are overseas investors registered with SEBI to invest in Indian securities such as shares, bonds and other permitted capital market instruments. They include foreign funds, institutional investors, investment vehicles, asset managers and other regulated overseas entities active in Indian markets.

That puts them in a different category from ordinary NRIs investing through NRE, NRO, PIS or non-PIS routes. The relaxation applies to SEBI-registered FPIs, not to every non-resident individual investor.

The difficulty centered on a mismatch between Indian documentation requirements and foreign systems. Some jurisdictions do not issue a Taxpayer Identification Number in the same manner as India, while institutional investors often do not have Indian-style identity documents for an authorised signatory.

Delays in a PAN application can hold up the entire investment cycle because the CAF ties together multiple steps. A problem in PAN allotment can stall registration, banking formalities and securities account setup for funds seeking to enter or continue investing in Indian capital markets.

Under the clarification, the authorised signatory named in the CAF can be used for the representative-related field in the PAN application. SEBI and CBDT also said no additional supporting documents are required for the authorised signatory, representative assessee or authorised representative in that context.

Regulators also addressed the TIN problem directly. Where a Taxpayer Identification Number or equivalent number is not applicable in the foreign jurisdiction, an FPI may enter “0000000000” in the TIN field.

Contact information rules were loosened as well. If an authorised signatory’s mobile number, landline number or email address is unavailable, the FPI may provide its own contact details, and a landline number may be used if a mobile number is unavailable.

Another change covers identity details for signatories. If PAN, Aadhaar or passport information for the authorised signatory is unavailable, the FPI registration number may be used instead.

CBDT also clarified that the authorised signatory’s liability remains limited to the purpose of the PAN application. That matters for foreign institutional structures in which the signatory acts for the fund but does not hold Indian identity documents personally.

The move addresses a narrow procedural issue, not tax treatment. FPIs remain subject to the Income-tax Act, SEBI regulations, KYC rules, anti-money laundering requirements and other reporting obligations.

Ordinary NRIs investing in India through NRE accounts, NRO accounts, demat accounts, mutual funds or stock brokers are not directly covered by this clarification. Still, the change points to a broader regulatory effort to reduce friction in cross-border investment where foreign systems do not line up neatly with Indian forms.

That wider push has reached other parts of the market. Effective October 1, 2026, resident buyers purchasing property from NRIs will no longer need a Tax Deduction Account Number and may deposit TDS using only the buyer’s PAN.

India has also raised the individual investment cap for NRIs in listed Indian companies to 10% from 5%, with the aggregate limit for such investors increased to 24%. Those steps sit alongside the FPI PAN application changes as part of a broader effort to reduce paperwork tied to foreign capital and overseas Indian investment.

The timing comes as foreign flows remain under pressure. As of May 17, 2026, FPIs had pulled out an estimated ₹2.2 lakh crore from Indian equities since the start of the year amid global volatility and domestic procedural friction.

PAN has long operated as a gatekeeping document in India’s financial system, which makes even technical rule changes consequential for market entry. By allowing the authorised signatory already listed in the CAF, accepting placeholder TIN information, permitting landline contacts and allowing FPI registration numbers in place of missing identity details, regulators have tried to make the system workable for legitimate overseas investors without altering core compliance obligations.

The changes also align with the transition to the Income Tax Act 2025, which replaced the 1961 Act effective April 1, 2026. That legislative shift brought new documentation requirements, and the latest SEBI-CBDT clarification narrows the gap between those rules and the way foreign institutions actually operate.

For Foreign Portfolio Investors, the immediate effect is administrative: less duplication in the PAN application, fewer dead ends in form fields and faster progress through onboarding. PAN remains essential, but regulators have now accepted that global funds do not always carry Indian-style identity markers, and India’s market entry process will have to account for that reality.