FPI Onboarding: Common Application Form and Permanent Account Number Requirement
CAF & PAN Requirement – All about the Indian Tax Identification Number
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- FPI Onboarding: CAF and PAN Requirement
Every taxpayer is required to obtain a PAN in India. For FPIs, as part of their account opening process in India, “Common Application Form” (‘CAF’) is required to be filled by their local custodian. CAF is a consolidated form used to:
- Obtain a license to operate as an FPI (FPI registration)
- PAN, which serves as the Indian tax identification number.
- Completion of Know Your Client (KYC) formalities, and
- Opening of bank and demat (securities) accounts in India. FPIs must designate a bank in India to route all their investment transactions in the country. They are permitted to freely repatriate proceeds/ income after discharge of appropriate Indian income tax thereon
For a detailed process flow and official instructions on filing the CAF, please refer to the NSDL website: Click Here
PAN
It is a unique 10-character alphanumeric tax identification number issued by the Indian Income-tax Authorities.
FPIs while filling the CAF need to select an appropriate status as per their constitution or form of existence i.e. non- corporate (individual, trust, LLP, AoP, Firm, AJP etc) or corporate, while applying for PAN through CAF. Once the PAN under particular status is obtained it cannot be amended/ changed. Hence, it is critical to choose the status of the FPIs with due care as it impacts applicable tax provisions and rates of taxes on the taxable income in India.