SEBI (Securities and Exchange Board of India)

SEBI and CBDT Ease PAN Compliance for Foreign Portfolio Investors: Major Relief to Simplify India Market Entry in 2026.

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SEBI and CBDT Ease PAN Compliance for Foreign Portfolio Investors: Major Relief to Simplify India Market Entry in 2026.

SEBI and CBDT have announced major PAN compliance relaxations for Foreign Portfolio Investors (FPIs) under the Income-tax Rules, 2026. Learn about the latest FPI onboarding relief measures, PAN application simplifications, operational impact, compliance updates, and how foreign investors can benefit from smoother India market entry.

SEBI and CBDT Announce Major PAN Relaxations for Foreign Portfolio Investors to Simplify India Entry

India’s financial regulators have taken a significant step toward improving the ease of doing business for overseas investors. In a major relief to the global investment community, the Securities and Exchange Board of India (SEBI) and the Central Board of Direct Taxes (CBDT) have announced important relaxations in PAN application requirements for Foreign Portfolio Investors (FPIs).

The move comes after industry participants highlighted practical challenges arising from the revised PAN application framework introduced under the Income-tax Rules, 2026. The relaxations are expected to reduce compliance burdens, accelerate onboarding timelines, and strengthen India’s position as a preferred global investment destination.

The latest clarifications are particularly important for foreign investment funds, custodians, designated depository participants (DDPs), compliance professionals, and capital market intermediaries involved in onboarding overseas investors into Indian securities markets.

Background: Revised PAN Rules Created Operational Challenges

On March 20, 2026, the CBDT notified revised PAN application forms under the newly implemented Income-tax Rules, 2026. The revised framework introduced several additional mandatory disclosures and compliance requirements.

Some of the newly mandatory fields included:

Taxpayer Identification Number (TIN)
Details of Representative Assessee (RA) or Authorised Representative (AR)
Mandatory mobile number requirements
Expanded identity documentation requirements
Enhanced verification details

While the objective behind the revised framework was to strengthen taxpayer identification and improve transparency, market participants soon began facing operational hurdles during FPI onboarding.

Foreign Portfolio Investors typically rely on a unified Common Application Form (CAF) for multiple purposes simultaneously, including:

SEBI registration
Opening bank accounts
Opening demat accounts
PAN application processing
Regulatory KYC compliance

The additional mandatory fields created bottlenecks because many overseas jurisdictions operate differently from India’s tax and identity documentation systems.

As a result, delays in PAN allotment began impacting the overall onboarding timeline for foreign investors seeking entry into Indian capital markets.

Recognising the issue, SEBI engaged with CBDT and industry stakeholders to identify practical solutions that could reduce unnecessary compliance friction without compromising regulatory oversight.

On May 15, 2026, CBDT issued a set of important clarifications and relaxations specifically aimed at facilitating smoother PAN issuance for FPIs.

Major PAN Relaxations Announced for FPIs

1. Authorised Signatory Details Will Be Sufficient

One of the most important relaxations relates to the Representative Assessee or Authorised Representative requirement.

Under the revised clarification:

The name of the Authorised Signatory mentioned in the Common Application Form will now be treated as sufficient for PAN processing.
No separate supporting documentation is required for:
- Authorised Signatory
- Representative Assessee
- Authorised Representative

Additionally, the liability of the Authorised Signatory is expressly limited only to the purpose of applying for PAN.

Why This Matters

This clarification significantly reduces documentation complexity for FPIs, especially where overseas funds have multiple operational entities and complex governance structures.

The move avoids duplication of documentation and simplifies the onboarding workflow for custodians and intermediaries.

2. Flexible Contact Information Requirements Introduced

CBDT has also relaxed the strict contact information requirements introduced earlier.

Under the updated clarification:

FPIs may provide their own address, email ID, or contact details if the Authorised Signatory’s information is unavailable.
Landline numbers are now accepted where mobile numbers are unavailable.

Practical Significance

Many foreign entities operate through institutional structures where individual authorised personnel may not always share direct personal contact details.

The earlier insistence on mandatory mobile numbers created unnecessary delays for institutional investors operating across multiple jurisdictions.

Allowing landline numbers and institutional contact details provides much-needed operational flexibility.

3. Alternate Identification Mechanism Allowed

Another major relief relates to identity documentation requirements.

Where PAN, Aadhaar, or passport details of the Authorised Signatory are unavailable, FPIs may now furnish:

Their FPI Registration Number

Why This Is Important

Foreign institutional structures often differ significantly from Indian compliance frameworks. Many overseas representatives may not possess Indian PAN or Aadhaar credentials.

The acceptance of FPI registration numbers as an alternate identifier aligns the PAN onboarding process with the realities of international investment structures.

This step also reduces dependency on individual-level identity documentation for institutional investors.

4. “0000” Allowed for Jurisdictions Without TIN System

CBDT has also addressed a critical international tax compliance issue involving Taxpayer Identification Numbers (TINs).

Under the clarification:

Applicants from jurisdictions where TIN or equivalent identification numbers are not issued may enter “0000” in the TIN field.

Operational Impact

This clarification resolves a major practical problem faced by investors from certain countries where tax identification frameworks differ from India’s system.

Without this relaxation, several genuine foreign applicants were facing technical rejection issues simply because their jurisdictions did not issue TINs.

The “0000” placeholder solution provides a practical workaround while maintaining system standardisation.

Why the PAN Relaxations Are Significant for India’s Capital Markets

The latest SEBI-CBDT coordination reflects India’s broader policy direction toward improving investor experience and reducing unnecessary regulatory friction.

Foreign Portfolio Investors play a crucial role in:

Enhancing liquidity in Indian markets
Supporting capital formation
Strengthening institutional investment participation
Improving market depth
Supporting India’s economic growth trajectory

Any operational delays in onboarding FPIs can negatively impact capital inflows and investor sentiment.

The PAN relaxation measures are expected to:

Accelerate FPI registration timelines
Reduce compliance burdens
Improve operational efficiency
Lower onboarding costs
Encourage smoother foreign capital inflows
Enhance India’s attractiveness as a global investment destination

Impact on Custodians, DDPs, and Compliance Teams

The clarifications are expected to provide substantial operational relief to:

Custodian Banks

Custodians managing large volumes of FPI onboarding will now experience reduced documentation bottlenecks and faster processing timelines.

Designated Depository Participants (DDPs)

DDPs handling SEBI registrations can now streamline onboarding procedures under the Common Application Form mechanism.

Compliance Teams

Internal compliance departments and legal teams will benefit from reduced documentation complexity and lower verification burdens.

Global Investment Funds

International investment structures can now onboard more efficiently without struggling with India-specific documentation constraints.

Alignment with Ease of Doing Business Initiatives

The latest reforms are also consistent with India’s ongoing efforts to improve its global business environment.

Over the last few years, regulators have increasingly focused on:

Digitisation of compliance processes
Simplification of KYC norms
Rationalisation of documentation
Faster onboarding mechanisms
International regulatory alignment

The PAN relaxation measures further reinforce India’s commitment to creating an investor-friendly ecosystem for global institutions.

Key Takeaways for Foreign Investors

Foreign Portfolio Investors planning entry into India should take note of the following major relief measures:

Compliance Area	Relaxation Introduced
Authorised Signatory	Name in CAF sufficient
Supporting Documents	No separate AR/RA documents needed
Contact Information	FPI details acceptable
Mobile Requirement	Landline accepted
Identity Proof	FPI Registration Number permitted
TIN Requirement	“0000” allowed where TIN unavailable

These changes are expected to significantly improve onboarding efficiency and reduce avoidable compliance delays.

Future Outlook

The SEBI-CBDT collaboration highlights the increasing responsiveness of Indian regulators toward practical implementation concerns raised by market participants.

As India continues to attract growing international investment interest, further digitisation and harmonisation of compliance systems may be expected in the coming years.

The latest PAN relaxations represent a balanced regulatory approach that preserves compliance standards while eliminating unnecessary procedural friction.

This development is likely to strengthen investor confidence and support continued growth in foreign participation within India’s capital markets ecosystem.

Professional Advisory and Compliance Support

Foreign investors, FPIs, custodians, investment funds, and intermediaries seeking assistance with:

FPI registration
PAN application processing
FEMA compliance
SEBI regulations
Income-tax compliance
Cross-border structuring
Investment entry strategies
Regulatory advisory
KYC and onboarding support

can consult experienced professionals for end-to-end compliance management.

Service Provider

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Group Websites

Conclusion

The latest PAN compliance relaxations announced jointly by SEBI and CBDT mark a welcome and pragmatic reform for Foreign Portfolio Investors entering India.

By addressing operational bottlenecks, simplifying documentation requirements, and introducing flexible alternatives for identity and contact disclosures, regulators have significantly improved the FPI onboarding ecosystem.

The measures are expected to accelerate foreign investment inflows, improve regulatory efficiency, and further strengthen India’s standing as an attractive destination for global capital.

For overseas investors and market intermediaries alike, the reforms represent a meaningful step toward a faster, smoother, and more business-friendly investment environment in India.