PAN Allotment for FPIs: Simplified Process Under Rules 2026

Foreign Portfolio Investors looking to enter India's vibrant capital markets faced unexpected compliance hurdles when new PAN application forms were introduced in March 2026. Imagine being a global fund manager with billions ready to invest in Indian equities, only to face delays over documentation requirements that didn't exist in your home jurisdiction. Recognising this challenge, India's tax and securities regulators acted swiftly. This comprehensive guide explains how CBDT, in consultation with SEBI, issued a press release on May 15, 2026, providing targeted compliance relaxations for foreign portfolio investors (FPIs) under the newly implemented Income Tax Rules 2026.

Understanding the New PAN Framework Under Income Tax Rules 2026

The Income Tax Act 2025 came into force from April 1, 2026, replacing the six-decade-old Income Tax Act of 1961. This monumental shift brought with it the Income Tax Rules 2026, which introduced a completely revamped PAN registration framework for both domestic and foreign applicants.

What Changed for Foreign Investors?

CBDT notified the Income-tax Rules, 2026 and new forms for PAN applications on March 20, 2026, making certain previously optional fields mandatory. The changes included:

• Additional fields such as Taxpayer Identification Number (TIN) and details of Representative Assessee (RA) or Authorised Representative (AR), while previously optional fields including mobile numbers were made mandatory
• Introduction of Forms 93, 94, 95, and 96 replacing Forms 49A and 49AA, categorized based on applicant type covering Indian individuals, Indian entities, foreign individuals, and foreign entities
• Improved validation measures like mandatory Aadhaar for residents and TIN/passport for non-residents to ensure authenticity

For Foreign Portfolio Investors specifically, Form 96 is designated for entities incorporated or formed outside India, effective April 1, 2026, under the Income-tax Act 2025.

Initial Compliance Challenges Faced by FPIs

Concerns were raised over difficulties in complying with new income-tax rules during investor onboarding, as CBDT had introduced new PAN application forms in March 2026 which added several mandatory information requirements for FPIs. The specific pain points included:

• Industry participants flagged that several overseas jurisdictions either do not issue equivalent tax identification numbers or follow different documentation norms, creating compliance hurdles for FPIs seeking PAN registration in India
• Difficulty in furnishing Representative Assessee or Authorised Representative details with supporting documentation
• Challenges in providing mobile numbers for entities operating in jurisdictions with different communication infrastructure
• Delays in the integrated CAF process affecting overall investment timelines

CBDT-SEBI Clarifications: Five Key Relaxations for FPIs

SEBI actively engaged with CBDT to facilitate continued ease of allotment of PAN to FPIs, following which CBDT issued a set of clarifications to simplify the PAN allotment process for foreign investors. These five critical relaxations transformed the FPI onboarding landscape:

1. Authorised Signatory Details Suffice for RA/AR Field

The name of the authorised signatory mentioned in the Common Application Form (CAF) will be sufficient for the representative field in the PAN application process, and no supporting documents related to the authorised signatory would be required. This is perhaps the most significant simplification measure.

Tax authorities clarified that the authorized signatory's responsibility is limited exclusively to the PAN application process, and FPIs are not required to submit separate supporting documents for the authorized signatory or AR/RA.

2. Flexible Contact Detail Requirements

The regulator allowed FPIs to use either the authorised signatory's contact details or the FPI's own contact details in cases where such information is unavailable. Additionally, CBDT allowed FPIs to provide a landline number in cases where a mobile number is unavailable.

This flexibility recognizes that not all global jurisdictions operate with the same telecommunications infrastructure, particularly institutional investors who may not maintain mobile numbers for entity-level operations.

3. TIN Field Relaxation: The '0000000000' Solution

One of the most practical clarifications addresses jurisdictions without TIN systems. FPIs may populate the TIN field with '0000000000,' eliminating the need to obtain documentation that does not exist in their home jurisdiction.

Applicants from jurisdictions where a Taxpayer Identification Number is not applicable will be allowed to enter '0000000000' in the relevant field, helping investors from countries that do not operate formal TIN systems.

4. FPI Registration Number as Alternative Identifier

FPI registration number can be used where PAN/Aadhaar/Passport details are unavailable, specifically if the authorised signatory's PAN/Aadhaar/passport is not available, the FPI's SEBI registration number can be furnished instead.

This practical workaround ensures that the absence of Indian identification documents for individual signatories doesn't derail the entire PAN application process.

5. Landline Numbers Accepted

Where a mobile number is unavailable, a landline number is accepted in the PAN application. This seemingly minor change has significant operational impact for institutional investors whose primary contact method may be through office landlines rather than mobile devices.

The Common Application Form (CAF): Single-Window Clearance Mechanism

Understanding the CAF is crucial to appreciating how these relaxations streamline the entire FPI onboarding process.

What is the Common Application Form?

The regulator has come out with a Common Application Form (CAF) for registration of FPIs, allotment of Permanent Account Number (PAN) and carrying out of Know Your Customer (KYC) for opening of bank and demat accounts. FPI applicants fill a single form in an electronic manner and obtain registration with SEBI, PAN from Income Tax Department, KYC and Open bank and demat account in India.

Recent CAF Update: June 2026 Revision

The Ministry of Finance notified a revised Common Application Form (CAF) for Foreign Portfolio Investors, with the notification issued by the Department of Economic Affairs on June 11, 2026, replacing the earlier framework notified in January 2020.

The revised Common Application Form will be used by FPIs for multiple regulatory and operational requirements, including registration in India, opening bank accounts, opening demat accounts, and applying for a Permanent Account Number (PAN).

How CAF Streamlines FPI Onboarding

FPIs generally use a single Common Application Form for several regulatory requirements, including SEBI registration, bank account opening, demat account setup and PAN application, and any delay in this integrated process can affect overall investment flows.

The CAF process works through Designated Depository Participants (DDPs) or custodians who submit applications on behalf of FPIs. The Application for allotment of PAN is automatically generated and sent by the Digital Depository Participant (DDP) once registration of FPI is completed through the Common Application Form.

Step-by-Step: PAN Allotment Process for FPIs in 2026

Here's how Foreign Portfolio Investors can navigate the simplified PAN allotment process under the new framework:

Step 1: Engage a Designated Depository Participant (DDP)

FPIs must work with a SEBI-registered DDP or custodian who will facilitate the entire CAF process. The DDP acts as the intermediary between the FPI and Indian regulatory authorities.

Step 2: Complete the Common Application Form

Fill out the revised CAF with the following information:

• Entity details: name, date of incorporation, country of incorporation, registered address
• Category under which FPI registration is sought (Category I or Category II)
• Details of investment managers and compliance officers
• Global and local custodian information
• Authorised signatory details (name as it appears in official documents)
• Contact information (email, phone/landline, address)
• TIN from home jurisdiction (or '0000000000' if not applicable)
• FATCA/CRS declarations

Step 3: Supporting Documentation

Under the relaxed framework, the documentation burden is significantly reduced. Provide:

• Certificate of incorporation or formation
• Proof of address
• Board resolution authorizing investment in India and appointing the authorised signatory
• Regulatory license or approval from home country regulator (if applicable)
• No separate documents required for the authorised signatory, RA, or AR under the May 2026 clarifications

Step 4: Form 96 Auto-Generation Through CAF

The DDP submits the CAF electronically, which automatically triggers Form 96 submission to the Income Tax Department for PAN allotment. The integration ensures that FPIs don't need to separately file Form 96.

Step 5: PAN Allotment and Registration Completion

Once complete set of documents are submitted, FPI license is required to be granted within 30 days, and the registration is permanent unless suspended or cancelled by SEBI or surrendered by the FPI.

The PAN is allotted simultaneously with SEBI registration, and the FPI becomes trade-ready once bank and demat accounts are opened.

Comparison: PAN Requirements Before and After May 2026 Clarifications

Requirement	Before May 15, 2026 Clarifications	After May 15, 2026 Clarifications
Representative Assessee (RA) / Authorised Representative (AR) Details	Required separate identification and supporting documents for RA/AR	Authorised signatory name from CAF sufficient; no supporting documents needed
Taxpayer Identification Number (TIN)	Mandatory field; caused issues for jurisdictions without TIN systems	Can enter '0000000000' where TIN not applicable in home jurisdiction
Authorised Signatory Identification	Required PAN/Aadhaar/passport details of authorised signatory	FPI registration number can be used if signatory's PAN/Aadhaar/passport unavailable
Mobile Number	Made mandatory field under March 2026 forms	Landline number accepted if mobile number unavailable
Contact Details (Email, Phone, Address)	Required specifically for RA/AR	Can use authorised signatory's details or FPI's own contact details
Processing Timeline	Delays due to documentation gaps and clarification requests	Streamlined process with 30-day target for complete registration

Tax Implications and Compliance for FPIs in FY 2026-27

While the PAN application process has been simplified, FPIs must remain aware of their ongoing tax obligations in India.

Capital Gains Tax for FPIs

Any security (whether listed or unlisted) held by the FPI is considered a capital asset and profit or loss arising from the transfer of such capital asset shall be taxed as capital gains, taxed as Long Term Capital Gain or Short Term Capital gain depending on the period of holding.

Current tax rates for FY 2026-27:

• Short-Term Capital Gains (STCG): 20% on equity shares and equity-oriented mutual funds held for less than 12 months
• Long-Term Capital Gains (LTCG): 12.5% on equity shares held for more than 12 months, with exemption up to ₹1,25,000 per financial year

For comprehensive tax calculation assistance, use the Income Tax Calculator to understand your potential tax liability on investment gains.

Securities Transaction Tax (STT) Changes in Budget 2026

Increased Securities Transaction Tax on derivatives, effective 1 April 2026, as follows: Futures: 0.05% (from 0.02%), Options premium: 0.15% (from 0.1%), Exercise of options: 0.15% (from 0.125%).

These STT increases impact FPIs trading in derivatives and should be factored into trading cost calculations. For equity and stock investment analysis, utilize the Stock Profit Calculator to determine net returns after all applicable taxes and transaction costs.

TDS and Tax Credit Verification

FPIs are subject to Tax Deducted at Source (TDS) on various income streams including dividends and interest. It's crucial to track TDS credits to avoid double taxation. Use the Form 26AS / TDS Fetch Tool to verify all TDS credits reflected against your PAN and ensure proper tax credit claims in your returns.

Example: LTCG Calculation for an FPI Investment

Let's consider a practical scenario:

Investment Details:

• FPI invests ₹10,00,00,000 in listed equity shares in May 2025
• Sells the entire holding in June 2026 for ₹12,50,00,000
• Holding period: 13 months (qualifies as Long-Term)
• Long-Term Capital Gain: ₹2,50,00,000

Tax Calculation:

• Exemption threshold: ₹1,25,000
• Taxable LTCG: ₹2,50,00,000 - ₹1,25,000 = ₹2,48,75,000
• LTCG Tax @ 12.5%: ₹2,48,75,000 × 12.5% = ₹31,09,375
• Net gain after tax: ₹2,50,00,000 - ₹31,09,375 = ₹2,18,90,625

For more complex scenarios involving multiple asset classes, the Capital Gain Calculator provides detailed tax computations across short-term and long-term holdings.

Budget 2026 Highlights Relevant to FPIs

The Budget maintains broad tax stability for Foreign Portfolio Investors (FPIs), with no changes to tax rates, except for amendment relating to buyback taxation and Securities Transaction Tax (STT).

Key Budget 2026 provisions affecting FPIs:

• Gains arising from the buy-back of shares to be taxed as capital gains rather than as dividend income, changing the tax treatment framework
• Elimination of the 18% goods and service tax on brokerage and other intermediary services provided by Indian brokers to FPIs, treating them as exports, reducing transaction costs
• Rationalisation of the Portfolio Investment Scheme proposing to extended to all individual non-residents, with individual investment cap doubled to 10% and aggregate cap to 24%
• Tax holiday on income from International Financial Services Centre units extended to 20 consecutive years out of the first 25 years, post which a concessional rate of 15% is available

Common Pitfalls to Avoid During FPI PAN Application

Despite the simplified process, FPIs should be mindful of these common mistakes:

1. Incorrect Form Selection

Ensure you're using Form 96 for foreign entities. Form No. 95 is for individuals who are not Indian citizens and Form No. 96 is for entities incorporated or formed outside India, effective April 1, 2026.

2. Name Mismatch Issues

The entity name on the CAF must exactly match the name on the certificate of incorporation. Any variation can cause delays or rejection.

3. Incomplete Authorised Signatory Information

While supporting documents are not required, the authorised signatory's name must be clearly mentioned in the CAF. Ensure proper board resolution or equivalent authorization exists.

4. TIN Field Errors

If your jurisdiction doesn't issue TIN, explicitly enter '0000000000' (ten zeros). Leaving the field blank or entering random characters will cause processing issues.

5. Communication Gaps with DDP

Maintain clear communication channels with your Designated Depository Participant. Ensure they're aware of the May 2026 relaxations and are applying them correctly in your application.

6. Delayed Response to Queries

If the Income Tax Department or SEBI raises queries, respond promptly. The 30-day timeline for registration is contingent on complete and accurate information submission.

Future Outlook: Continuing Ease of Doing Business Reforms

CBDT's clarifications ensure that the revised PAN framework does not disrupt foreign portfolio investment into India. Market analysts believe the easing of rules will improve investor confidence and support smoother foreign capital inflows into Indian financial markets.

The May 2026 clarifications represent a broader trend in India's approach to foreign investment:

• Responsive Regulation: The quick turnaround between March 2026 form notification and May 2026 clarifications demonstrates regulatory agility
• Inter-Regulatory Coordination: Effective collaboration between CBDT and SEBI ensures consistent policy implementation
• Stakeholder Engagement: The relaxations came directly from industry feedback, showing receptiveness to ground-level challenges
• Technology-Driven Processes: The integrated CAF platform exemplifies digital transformation in regulatory compliance

Existing FPIs should review their PAN application processes to ensure they incorporate the latest CBDT clarifications, and investment custodians, designated depository participants (DDPs), and compliance teams should also update their onboarding checklists to reflect the revised requirements.

Frequently Asked Questions

What are the key relaxations for FPI PAN allotment under Income Tax Rules 2026?

CBDT announced five major relaxations on May 15, 2026: (1) Authorised signatory name from Common Application Form is sufficient for Representative Assessee/Authorised Representative field, (2) No supporting documents required for authorised signatory, (3) FPIs can enter '0000000000' in TIN field where not applicable in their jurisdiction, (4) FPI registration number can be used instead of PAN/Aadhaar/passport details for authorised signatory, and (5) Landline numbers accepted where mobile numbers are unavailable. These measures significantly simplify the PAN application process for foreign investors.

Which form do FPIs use to apply for PAN under Income Tax Rules 2026?

Foreign Portfolio Investors incorporated or formed outside India must use Form 96 to apply for PAN under Income Tax Rules 2026. This form replaced the earlier Form 49AA effective April 1, 2026. Form 96 is specifically designed for foreign entities and is governed by Rule 158 of the Income Tax Rules 2026. FPIs typically submit Form 96 automatically through the Common Application Form (CAF) via their Designated Depository Participant (DDP) or custodian, creating a seamless single-window clearance process.

What is the Common Application Form (CAF) for FPIs?

The Common Application Form (CAF) is a single integrated application form that Foreign Portfolio Investors use for multiple purposes: SEBI registration, PAN allotment from the Income Tax Department, KYC completion, and opening bank and demat accounts in India. Introduced to enhance ease of doing business, the CAF was revised in June 2026 to align with the new Income Tax Rules. It serves as a single-window clearance mechanism, significantly reducing the time and documentation burden for foreign investors entering Indian capital markets.

What happens if an FPI's jurisdiction does not issue a Taxpayer Identification Number (TIN)?

If a Foreign Portfolio Investor is from a jurisdiction where TIN or its equivalent is not issued or not applicable, they can simply enter '0000000000' (ten zeros) in the TIN field of their PAN application. This clarification was issued by CBDT on May 15, 2026, specifically to address difficulties faced by FPIs from countries without formal TIN systems. This ensures that investors from such jurisdictions are not disadvantaged or delayed in the PAN allotment process under the new Income Tax Rules 2026.

When did the new PAN application forms and Income Tax Rules 2026 come into effect?

The Income Tax Act 2025 and Income Tax Rules 2026 came into effect from April 1, 2026, replacing the six-decade-old Income Tax Act 1961. CBDT notified the revised PAN application forms (Forms 93, 94, 95, and 96) on March 20, 2026. Following stakeholder concerns about compliance difficulties for FPIs, CBDT issued clarifications on May 15, 2026, to simplify the PAN allotment process specifically for Foreign Portfolio Investors using the Common Application Form.

Conclusion: Streamlined Access to India's Growing Capital Markets

The May 2026 CBDT-SEBI clarifications represent a significant milestone in India's journey toward becoming a more investor-friendly destination for global capital. By addressing practical compliance challenges faced by Foreign Portfolio Investors, the relaxations ensure that the transition to the new Income Tax Act 2025 and Income Tax Rules 2026 doesn't create unnecessary barriers to foreign investment.

For FPIs looking to invest in India's dynamic equity markets, the simplified PAN allotment process through the integrated Common Application Form offers a seamless onboarding experience. The key is working with experienced DDPs who understand the nuances of the revised framework and can navigate the process efficiently.

Whether you're calculating potential tax liabilities on Indian investments, tracking TDS credits, or planning capital gains strategies, TaxFetch India provides comprehensive tools to support your tax compliance needs. Explore our complete suite of Tax Tools designed specifically for investors navigating India's evolving tax landscape.

Stay informed, stay compliant, and leverage India's growth story with confidence through streamlined regulatory processes designed for the modern global investor.