As the Income Tax Return (ITR) filing season for Assessment Year (AY) 2026-27 gathers momentum, the Income Tax Department has provided significant relief to taxpayers facing authentication and verification challenges on the Income Tax Portal.

The Department has started enabling a temporary "Relaxation of OTP Norms for PAN Holders", allowing eligible taxpayers to complete critical portal-related activities that were previously getting delayed due to OTP verification challenges.

This development is particularly important for Non-Resident Indians (NRIs), OCI card holders, overseas Indians, and global taxpayers, many of whom have faced practical difficulties in completing their tax compliance obligations due to Aadhaar-linked authentication requirements and portal verification issues.

The move comes as a welcome step towards simplifying tax compliance and improving the taxpayer experience during the AY 2026-27 filing season.

Income Tax Portal Update: What Has Changed?

Several taxpayers have recently received communications from the Income Tax Department confirming that OTP-related restrictions have been temporarily relaxed for eligible PAN holders.

This relaxation allows taxpayers to complete activities such as:

• Bank account addition and validation
• Profile updates
• Registration-related modifications
• Income Tax Portal account maintenance
• Refund-related banking updates

For many taxpayers, particularly NRIs, this relaxation could help resolve issues that have prevented completion of important compliance requirements.

Taxpayers receiving such communications should complete all pending actions immediately, as these relaxations are generally available only for a limited period.

Why Was This Relief Required?

Over the past several weeks, numerous taxpayers have reported difficulties while attempting to complete verification and banking-related activities on the Income Tax Portal.

The issue was particularly pronounced among NRIs who:

• Do not possess Aadhaar.
• Do not have access to an Aadhaar-linked mobile number.
• Have relocated overseas and no longer maintain active Indian mobile numbers.
• Primarily use international mobile numbers for communication.

For these taxpayers, even routine compliance activities became unexpectedly challenging.

Understanding the NRI Verification Challenge

Many NRIs found themselves caught in a compliance bottleneck due to limited verification options.

Net Banking Verification Issues

Historically, Net Banking has been one of the most preferred methods for NRI taxpayers to verify their Income Tax Returns.

However, many taxpayers recently reported receiving repeated:

"Access Denied"

errors while attempting to access verification services through Net Banking.

Since Net Banking is widely regarded as one of the simplest and most secure methods of verification, the issue created substantial compliance concerns for taxpayers residing abroad.

OTP-Based Bank Account Validation Challenges

• Another commonly used route involves validating a bank account on the Income Tax Portal.
• However, the activation process frequently required OTP-based authentication.
• For taxpayers without access to their Indian mobile numbers, this became a significant hurdle.

Demat Account Verification Limitations

Demat account-based verification also requires successful activation and authentication procedures, which can be difficult for overseas taxpayers to complete.

Digital Signature Certificate (DSC)

While DSC remains available as a verification method, many individual taxpayers prefer simpler digital alternatives rather than maintaining a Digital Signature Certificate solely for tax filing purposes.

Physical ITR-V Submission

Taxpayers may also verify returns by sending signed ITR-V forms to CPC Bengaluru.

Although legally valid, this process is significantly less convenient for taxpayers residing outside India and does not align with the broader objective of seamless digital compliance.

Why Bank Account Validation Matters

For many taxpayers, bank account validation is even more critical than return verification itself.

A validated bank account is required for:

• Income Tax Refund Processing
• Refunds are generally credited only to validated bank accounts linked to the Income Tax Portal.
• Future Compliance Activities
• Several Income Tax Portal functions depend on successfully validated banking details.
• Smooth Tax Administration
• Validated banking information helps prevent delays in refunds, notices, and future filing requirements.
• The inability to validate a bank account can therefore have direct financial consequences for taxpayers awaiting refunds.

A Positive Step by the Income Tax Department

The recent OTP relaxation reflects the Income Tax Department's responsiveness to taxpayer concerns and its willingness to improve the user experience on the Income Tax Portal.

For affected taxpayers, this relief may help:

• Complete pending bank validations.
• Update communication details.
• Resolve profile-related issues.
• Facilitate refund processing.
• Complete pending registration activities.

While this is a welcome development, taxpayers should act promptly and utilize the relaxation period to complete all pending tasks.

AY 2026-27: Why Professional Tax Assistance Matters More Than Ever

The AY 2026-27 filing season arrives at a particularly significant juncture for Indian taxpayers.

The Government has introduced the Income Tax Bill, 2025, which is expected to eventually replace the decades-old Income Tax Act, 1961 and modernize India's direct tax framework.

At the same time, tax administration is becoming increasingly technology-driven, with greater reliance on:

• AIS (Annual Information Statement)
• TDS reconciliation
• Data analytics
• Automated compliance checks
• Foreign asset reporting
• Digital verification systems
• Information sharing across jurisdictions

For NRIs, OCI card holders, returning Indians, expatriates, and globally mobile professionals, tax compliance now extends far beyond simply filing a return.

Taxpayers must carefully evaluate:

• Residential Status
• NRI Taxation Rules
• RNOR Eligibility
• DTAA Benefits
• Foreign Tax Credit Claims
• Overseas Income Reporting
• Foreign Asset Disclosures
• Capital Gains Taxation
• FEMA Implications
• Repatriation Planning

A simple error in reporting, classification, verification, or treaty application can result in delayed refunds, notices, additional tax liabilities, or prolonged compliance proceedings.

The recent OTP and verification challenges further highlight the importance of proactive tax planning and professional guidance.

Filing Your Income Tax Return for AY 2026-27?

With the filing season now underway, taxpayers should begin preparations well before the deadline.

Whether you are:

• An NRI residing overseas
• An OCI card holder
• A Returning Indian
• A Global Executive
• A Foreign Citizen with Indian income
• An Individual holding foreign assets
• An Investor earning income across multiple jurisdictions

early preparation can help avoid last-minute compliance issues, refund delays, and portal-related challenges.

Why NRIs and Global Indians Choose Dinesh Aarjav & Associates

For more than 25 years, Dinesh Aarjav & Associates has specialized in helping NRIs and global Indians navigate complex Indian and international tax regulations.

Our team of Chartered Accountants, CPAs, ACCA professionals, and international tax specialists assists clients across:

• United States
• Canada
• United Kingdom
• Australia
• UAE
• Singapore
• Europe
• Asia-Pacific

We have successfully assisted 10,500+ clients globally with cross-border tax and regulatory matters.

Our AY 2026-27 Tax Filing and Advisory Services

India Income Tax Return Filing

Comprehensive tax return preparation and filing for residents, NRIs, OCI holders, and returning Indians.

NRI Tax Planning

Strategic tax planning tailored to overseas Indians and cross-border taxpayers.

DTAA Advisory

Optimization of Double Taxation Avoidance Agreement benefits.

• Foreign Tax Credit Claims
• Review and reporting of taxes paid overseas.
• RNOR and Returning to India Planning
• Tax-efficient transition planning for individuals relocating to India.
• Capital Gains Taxation

Advisory on taxation of property sales, stocks, mutual funds, ESOPs, and other investments.

• Foreign Asset Reporting

• Guidance on Schedule FA and global reporting obligations.

• FEMA and Repatriation Advisory
• Support for NRE/NRO accounts, remittances, and repatriation of funds.
• Refund Assistance
• Resolution of refund delays, portal issues, and bank validation challenges.

Need Help with AY 2026-27 Tax Filing?

If you are filing your Income Tax Return for AY 2026-27 and need assistance with:

• NRI Tax Filing
• DTAA Claims
• Foreign Tax Credit
• RNOR Planning
• Returning to India Advisory
• Capital Gains Computation
• Foreign Asset Reporting
• FEMA Compliance
• Income Tax Refunds
• Income Tax Portal Issues

our team would be happy to assist.

About Dinesh Aarjav & Associates

Dinesh Aarjav & Associates is a leading NRI-focused tax and advisory firm with over 25 years of experience serving global Indians worldwide.

With offices in India, the United States, Canada, and the United Kingdom, we provide specialized advisory and compliance services for individuals navigating cross-border tax, regulatory, and financial matters.