If you are a mutual fund investor, the chances are that your folio is already mapped to Permanent Account Number (PAN). Without linking the tax department’s identify document, investing new funds into your account (lumpsum or SIP) would soon become unfeasible with effect from March 31, 2023.
So, to ensure that you are able to invest and redeem your investments in the next financial year, it is vital to link your folio to PAN.
Why to update your PAN?
Those investors who have yet not updated their PAN in their folios are supposed to do it as soon as they can. The last date to do this is March 31, 2023.
Mutual fund investors must be aware of the fact that if these details are not updated, the non-PAN folios stand to get frozen the very next day of the deadline’s expiry.
Not only will these accounts get frozen, but any further benefits such as dividend declared by the fund houses will also not be permitted to these accounts.
“No investments (systematic or lumpsum) shall be permitted in such folios wherein PAN or PAN exempt KYC reference number (PEKRN) are not available. Dividend pay-out by MF schemes to such folios shall also be disallowed,” Amfi stated in its notification.
Besides, the unitholders whose folios have been frozen for non-linking of PAN will be able to avail services only after submitting these details.
And even to be able to lodge their grievance, users will have to furnish these details.
Those users who are PAN exempt must update their PEKRN (PAN Exempt KYC reference number). All other provisions will apply to the PAN-exempt users in the same way.
What are the current rules?
It is worth mentioning here that redemption from mutual fund accounts which are unlinked to PAN is already not allowed. This has been in force since September 2019 after the markets’ regulator SEBI raised concerns over huge redemptions from these accounts.
Also, most of the mutual fund folios which are not linked to the PAN accounts are the ones that opened before Jan 1, 2011 because it is only after this date, the PAN became compulsory for mutual fund investments.
