How to Link Your PAN with Your Bank Account in Nepal

If your bank has recently asked you to "update your PAN" or "complete KYC with PAN," you are not alone — Nepali banks have been steadily tightening this requirement in line with Nepal Rastra Bank (NRB) and Inland Revenue Department (IRD) reporting rules. Linking your Permanent Account Number (PAN) to your bank account is a simple process once you know the steps, but skipping it can quietly cost you through higher withholding tax and account restrictions. Here's exactly why banks ask for it, how to complete it, and what happens if you leave it unlinked.

Why Do Banks Require PAN Linkage?

Banks in Nepal are required to report interest income, large transactions, and certain account activity to tax authorities. Your PAN is the identifier that ties this reporting back to your specific tax record. Specifically, PAN linkage helps banks and IRD to:

• Apply the correct Tax Deducted at Source (TDS) rate on interest earned from savings and fixed deposit accounts
• Report interest income accurately against your PAN for annual tax reconciliation
• Comply with Know Your Customer (KYC) and anti-money-laundering requirements tied to large or unusual transactions
• Allow certain high-value services — larger fixed deposits, loan facilities, remittance thresholds, and business current accounts — that require PAN as a precondition

In short, PAN linkage is less about the bank itself and more about ensuring the bank can correctly report your financial activity to the tax system.

Step-by-Step: How to Link PAN at Your Bank

Step 1 — Gather your documents. You will typically need a copy of your PAN registration certificate, your citizenship certificate or another valid ID used to open the account, and your existing account passbook or account number.

Step 2 — Visit your branch or use digital channels. Most banks allow PAN updates at the branch where the account was opened. A growing number also allow PAN submission through mobile banking apps, internet banking KYC-update sections, or customer service email, though branch visits remain the most reliable route for account types.

Step 3 — Fill out the PAN/KYC update form. The bank will provide a short form (sometimes combined with a periodic KYC update form) where you fill in your PAN number and attach the supporting documents.

Step 4 — Bank verifies the PAN. The branch staff cross-checks the PAN certificate details — name, PAN number, registration type — against the account holder's information and, where systems allow, against IRD records.

Step 5 — Confirmation. Once verified, your account is updated, and future interest certificates, TDS certificates, and statements will reflect your PAN. This usually takes anywhere from same-day to a few business days depending on the bank's internal process.

What Happens If You Don't Link PAN?

Leaving your account unlinked doesn't necessarily freeze it, but it can lead to a few practical downsides:

• Higher default TDS on interest: Without a linked PAN, banks may apply a higher default withholding tax rate on interest income compared to the standard rate available to PAN-linked accounts.
• Reporting mismatches: Interest income earned may not reconcile properly against your tax record, which can create discrepancies if IRD cross-checks your income tax return against bank data.
• Restricted services: Some banks will not process large fixed deposits, certain loan products, or business account facilities without a PAN on file.
• Delayed transactions: Large-value transfers or cash transactions above the bank's internal or NRB-mandated threshold may require PAN verification before processing.

For most individuals with modest, everyday savings accounts, the immediate impact may be limited — but the moment interest income, deposit size, or transaction volume increases, unlinked PAN status starts to matter financially.

Frequently Asked Question

Is PAN linking mandatory for a basic savings account?

Not strictly, for a basic, low-balance personal savings account with no significant interest income or large transactions, PAN linkage is generally not an absolute requirement to keep the account open. However, banks are increasingly encouraging or requiring PAN as part of routine KYC updates for all account holders, and it becomes effectively necessary once your account crosses interest-income thresholds, transaction limits, or you want to access products like fixed deposits, loans, or business accounts. Given how straightforward the process is, most banking professionals recommend linking PAN proactively rather than waiting until it becomes unavoidable.