New Income Tax Rules: The Income Tax Department has released draft income tax rules under the new income tax regime. It proposes significant changes regarding the requirement of a PAN card for transactions involving the purchase and sale of property.
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New Income Tax Rules: The Income Tax Department has released draft income tax rules under the new income tax regime. It proposes significant changes regarding the requirement of a PAN card for transactions involving the purchase and sale of property.
What is the new rule?
Until now, providing a PAN card was mandatory for buying or selling property (a house or plot) worth more than ₹10 lakh. The government has now proposed increasing this limit to ₹20 lakh. If this rule is implemented, providing a PAN card will no longer be required for property transactions worth less than ₹20 lakh. However, providing a PAN card will remain mandatory for properties worth ₹20 lakh or more.
Gifts and joint development deals will also be covered
The new draft states that not only purchases and sales, but also certain other property-related transactions will be covered under the PAN requirement, such as gifting a property and entering into a joint development agreement. However, the ₹20 lakh limit will still apply to these transactions.
Why was this limit increased?
Tax experts believe that the previous limit of ₹10 lakh was too low for the current real estate market. Nowadays, even small properties in cities often cost more than ₹10 lakh, forcing even small buyers to face the hassles of reporting.
According to experts, this change will provide significant relief to property buyers in smaller cities and low-cost markets and reduce their paperwork.
What hasn’t changed?
The new proposal will keep the system for monitoring large transactions the same. Providing a PAN will be mandatory for every property transaction worth ₹20 lakh or more. This will enable the tax department to track large property transactions and make it easier to match them to the buyer’s income.
What will happen next?
These rules are currently in draft form. The government has sought suggestions from the public and stakeholders. Final rules will be implemented only after reviewing these suggestions.
Stricter PAN Application Process for Companies
The deal proposal also tightens the PAN application process for companies. It will now be mandatory to provide a declaration at the time of application stating that the company does not already have a PAN. Internal checks will be required to avoid duplication of PANs in branches and project offices where PANs already exist.
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