en.Wedoany.com Reported - The Central Board of Direct Taxes (CBDT) in India has announced that, effective from April 1, 2026, the threshold for providing a Permanent Account Number (PAN) in real estate transactions will be increased from 1 million rupees to 2 million rupees. This new rule applies to all real estate transactions, including the sale and purchase of land, buildings, or related rights, aiming to simplify transaction processes and reduce the administrative burden for some taxpayers.

The new rules not only adjust the PAN threshold but also expand the scope of compliance, explicitly covering property transfers made through gifts and joint development agreements. Rahul Charkha, Partner at Economic Laws Practice, stated: "For buyers and sellers involved in transactions valued below 2 million rupees, this change reduces paperwork and administrative friction, especially for elderly individuals or low-income individuals dealing with small ancestral assets."

However, exemption from providing PAN does not equate to exemption from tax obligations. Charkha emphasized: "Sellers are still required to report capital gains in their income tax returns, and both parties should maintain appropriate documents to independently substantiate the transaction." Tushar Kumar, Partner at Singhania & Co., added: "Voluntarily providing PAN helps in accurate reporting in the Annual Information Statement (AIS), reducing future discrepancies. Maintaining complete documentation is crucial, including copies of PAN or Aadhaar, bank transaction records, and sale agreements."

Taxpayers should follow prudent practices to ensure transparency, such as making payments via bank transfer or cheque rather than cash, and maintaining documents like sale agreements and stamp duty receipts. Buyers need to document the source of funds, while sellers should preserve records of the original purchase and improvement costs. According to stamp duty valuation rules, if the property valuation exceeds 2 million rupees, PAN must be reported regardless of the actual transaction value. Furthermore, cash deposits or withdrawals reaching 1 million rupees or more within a financial year also require providing PAN, or submitting Form 60 if PAN is unavailable.

In summary, while India's new PAN rules for real estate transactions have raised the threshold, taxpayers still need to remain vigilant and maintain complete documentation to avoid potential tax issues. This change is expected to affect real estate transactions after April 1, 2026, promoting more efficient transaction processes.

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