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Rule 157Published

Rule 157: PAN exceptions for specified non-resident investors

Rule 157 provides two conditional exceptions from section 262 PAN requirements for the stated non-resident investor cases. It requires restricted Indian-income facts, prescribed identification details and reporting by the fund or broker. Notification 94/2026 broadened the specified-fund definition from 21 July 2026.

Official notified Income-tax Rules, 2026

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Rule 157 - Persons Exempt from obtaining Permanent Account Number under section 262

(1) The provisions of section 262 shall not apply to a non-resident (not being a company or a foreign company) who has, during a tax year, made investment in a specified fund, if the following conditions are met: — (a) such non-resident does not earn any income in India other than the income from the investment in the specified fund during the tax year; (b) the income-tax due on such income of non-resident is deducted at source and remitted to the Central Government by the specified fund at the rates specified sections 393(1) [Table: Sl. No. 4(iii)], 393(2) [Table: Sl. No. 8] and 393(4) [Table: Sl. No. 14]; and (c) the non-resident furnishes the following details and documents to the specified fund: — (i) name, email id and contact number; (ii) address in the country or specified territory outside India of which he is a resident; (iii) a declaration that he is a resident of a country or specified territory outside India; and (iv) Tax Identification Number (TIN) in the country or specified territory of his residence, and where no such number is available, then a unique number on the basis of which the non-resident is identified by the government of that country or the specified territory.

(2) The specified fund shall — (a) furnish a quarterly statement for the quarter of the financial year, in which the details and documents referred to in sub-rule (1)(c) are received by it, in Form No. 92 electronically to the Director General of Income-tax (Systems) or a person authorised by him; and (b) upload the declaration of foreign residency as referred to in sub-rule (1)(c)(iii) within fifteen days from the end of the quarter of the financial year to which such statement relates.

(3) The provisions of section 262 shall not apply to a non-resident, being an eligible foreign investor, who has made transaction only in capital assets referred to in section 70(1)(r), which are listed on a recognised stock exchange located in any International Financial Services Centre and the consideration on such transfer of capital asset is paid or payable in foreign currency, if the following conditions are fulfilled: — (a) the eligible foreign investor does not earn any income in India, other than the income from transfer of a capital asset referred to in section 70(1)(r); (b) the eligible foreign investor furnishes the following details and documents to the stock broker through which the transaction is made: — (i) name, email id, and contact number; (ii) address in the country or specified territory outside India of which he is a resident; (iii) a declaration that he is a resident of a country or specified territory outside India; and (iv) Tax Identification Number (TIN) in the country or specified territory of his residence, and where no such number is available, then a unique number on the basis of which the non-resident is identified by the Government of that country or the specified territory.

(4) The stock broker shall — (a) furnish a quarterly statement for the quarter of the financial year, in which the details and documents referred to in sub-rule (3) are received by it, in Form No. 92 electronically to the Director General of Income-tax (Systems) or a person authorised by him; and (b) upload the foreign residency declaration as referred to in sub-rule (3)(b)(iii) within fifteen days from the end of such quarter of the financial year to which such statement relates.

(5) For the purposes of this rule, — (a) ―eligible foreign investor‖ means a non-resident who operates in accordance with the Securities and Exchange Board of India, Circular IMD/HO/FPIC/CIR/P/2017/003, dated 4th January, 2017; (b) ―International Financial Services Centre‖ shall have the meaning assigned to it in section 2(q) of the Special Economic Zones Act, 2005 (28 of 2005); (c) “specified fund” means — (i) any fund established or incorporated in India in the form of a trust or a company or a limited liability partnership or a body corporate which has been granted a certificate of registration as a Category I or Category II Alternative Investment Fund and is regulated under — (A) the Securities and Exchange Board of India (Alternative Investment Funds) Regulations, 2012 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992); or (B) the International Financial Services Centres Authority (Fund Management) Regulations, 2022 made under the International Financial Services Centres Authority Act, 2019 (50 of 2019) and which is located in any International Financial Services Centre; or (ii) any fund which has been referred to in Schedule VI [Note 1(g)] to the Act; (d) ―stock broker‖ means a person having trading rights in a recognised stock exchange located in any International Financial Services Centre and the member of such exchange.

Rule breakdown

The fund-investment exception has cumulative conditions

Sub-rule (1) concerns the stated non-resident category, expressly described as not being a company or a foreign company, investing in a specified fund during the tax year. The investor must have no other Indian income during that year.

The tax due on the fund income must be deducted and remitted by the fund at the specified rates, and the investor must provide all listed details. The PAN exception is not an exemption from tax on the income.

Use the current specified-fund definition

From 21 July 2026 the definition includes the stated Indian-established Category I or Category II AIF structures regulated under the listed SEBI framework, or the stated IFSC framework and location condition. It also retains funds within the cited Schedule VI definition.

Check the actual legal structure, registration category, regulatory framework and applicable location condition. The amendment does not remove the investor and income conditions in sub-rule (1).

The IFSC capital-asset transaction exception is separate

Sub-rule (3) concerns an eligible foreign investor transacting only in the specified section 70(1)(r) capital assets listed on a recognised IFSC exchange, with foreign-currency transfer consideration. The investor must not earn other Indian income beyond the stated transfer income.

Check the defined eligible-foreign-investor status and provide the listed details to the transaction’s stock broker. This is a separate route from the specified-fund investment case.

Collect all four identification items

Both routes require name, email and contact number; the foreign residence address; a foreign-residency declaration; and the residence-country TIN or, if unavailable, the government identification number described in the rule.

A missing PAN does not mean the fund or broker may omit investor identification and residency evidence.

Form 92 and declaration upload are intermediary obligations

The fund or broker furnishes the quarterly Form 92 statement for the quarter in which the details and documents are received. It uploads the specified foreign-residency declaration within fifteen days from that quarter’s end.

Keep these two obligations distinct. The rule expressly attaches the fifteen-day wording to the declaration upload; do not recast it as a separate quoted deadline for every filing without checking the current official instructions.

Recheck the facts each tax year

Confirm the absence of other Indian income, the qualifying fund or asset transaction and the required tax deduction or reporting conditions for the actual case. Retain the investor documents and intermediary filing record.

Do not describe this as a blanket PAN exemption for all non-residents, all foreign companies or every IFSC investment.

Key takeaways

Two conditional routes

Fund investment and the specified IFSC asset transactions are distinct.

Current July definition

Use the substituted specified-fund definition.

Identity evidence remains required

PAN relief does not remove the listed investor documents.

Not an income-tax exemption

The fund route expressly requires deduction and remittance of tax due.

Practical checklist

  • Check the correct exception and every condition.
  • Use the current fund definition.
  • Collect all prescribed identification documents.
  • Retain tax-remittance and reporting evidence as applicable.

Avoid

  • Do not equate PAN relief with income exemption.
  • Do not extend the rule to every non-resident or IFSC transaction.

FAQs

Is every non-resident exempt from PAN?

No. The rule defines limited categories with cumulative income, transaction, identification and reporting conditions.

Did Notification 94/2026 remove all the other conditions?

No. It substitutes the specified-fund definition in sub-rule (5)(c); the other requirements remain.

What if the residence country does not issue a TIN to the investor?

The rule permits the stated unique number by which that government identifies the non-resident when no TIN is available.

Does the fifteen-day clause describe the declaration upload?

Yes. Sub-rules (2)(b) and (4)(b) expressly apply it to uploading the foreign-residency declaration after quarter-end.

Glossary

Form 92
The quarterly intermediary statement prescribed by this rule.
Specified fund
The definition substituted by Notification 94/2026, including the stated AIF categories and Schedule VI funds.

Official sources