The Income Tax Department has unveiled its Draft Income Tax Rules, 2026, which propose significant changes to the Permanent Account Number (PAN) requirements for property transactions. If implemented, these changes are set to take effect from April 1.
Key Changes in PAN Requirements for Property Transactions
Increased Reporting Threshold
Currently, any purchase or sale of immovable property exceeding ₹10 lakh mandates PAN disclosure. The new draft rules propose to increase this threshold to ₹20 lakh. This means property transactions valued below ₹20 lakh will not require mandatory PAN disclosure. However, transactions at or above this limit will continue to be subject to PAN compliance.
Coverage of Additional Arrangements
The draft rules also seek to explicitly include various arrangements, such as property transfers via gifts and joint development agreements, within the PAN compliance framework, based on the applicable value threshold.
Reasons Behind the Revised Threshold
Tax professionals are voicing support for the proposed changes, citing a reflection of the current property market valuations. Richa Sawane, a Tax Partner at Grant Thornton Bharat, explains that the existing ₹10 lakh limit often captured more modest transactions, especially given the upsurge in property prices in urban areas.
Atul Monga, CEO of BASIC Home Loan, adds that the elevated threshold may lessen documentation burdens for smaller buyers, particularly in regions where property values fall short of metropolitan benchmarks.
What Remains Unchanged?
The draft maintains mandatory PAN reporting for higher-value transactions. Any deal valued at ₹20 lakh and above will still require PAN disclosure, ensuring that larger property transfers are traceable within the tax system. This PAN linkage allows tax authorities to align property records with income disclosures, ensuring oversight in the real estate sector.
Next Steps for the Draft Rules
As the rules are currently in draft form, the government may adjust them after considering feedback from stakeholders before issuing the final notification. Stay updated for further developments that could impact your property transactions.
By staying informed about these tax rule changes, property buyers and sellers can navigate the market more effectively and take advantage of the updated compliance regulations.
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