PAN Card for Property Registration: Is It Mandatory in India?

If you are planning to buy or sell land, a house, or a flat in India, you must provide your Permanent Account Number (PAN) details. A PAN card is mandatory for certain property transactions and is an important requirement for completing the registration process. Since real estate transactions involve high-value financial dealings, quoting a valid PAN card helps ensure transparency and compliance with the applicable tax regulations.

Read the blog below to learn more about the PAN Card for Property Registration, when it is mandatory, and why it is required by the Government of India.

Is a PAN Card Mandatory for Property Transactions?

A PAN card is indeed necessary for important property transactions involving the buying and selling of immovable property. This is done to reduce land fraud and prevent the creation of counterfeit arrangements. This will enhance the transparency and integrity of property transactions.

• It is also necessary to include the property owner's PAN card when purchasing or selling property.
• The Income Tax Department of India issues a PAN card to document such transactions.
• Its main function is to prevent fraud and ensure that all financial aspects of property transactions are properly recorded and monitored.
• This is required since buying and selling properties often involve large financial transactions.
• After these transactions are linked to PAN numbers, the authorities create a traceable and verifiable record of such dealings.
• This not only helps regulatory bodies in effective monitoring but also safeguards against illegal practices such as land fraud and the creation of fraudulent property arrangements.

What are the Cases Where a PAN Card is Mandatory?

To stop fraudulent activities and broaden the tax base, the Government of India has made it compulsory to quote a PAN card when an individual proceeds with the following types of property transactions in India.

Purchase or sale of immovable property above Rs. 10 lakh

• Registration for the sale or purchase of a property valued above Rs. 10 lakh is not possible without both the seller and the buyer quoting their PAN cards.

To claim TDS from Rental Income

• For rental payments exceeding Rs. 50,000 per month, tenants are required to deduct 2% TDS (or the applicable rate as per the latest tax provisions) before making the payment to the landlord. Providing the landlord's PAN ensures that the deducted TDS is correctly credited to their tax account.
• If the landlord does not furnish their PAN, TDS may be deducted at a higher rate, subject to the applicable provisions of the Income Tax Act

To claim TDS if the buyer spends more than Rs. 50 lakh to purchase an immovable property

• If a resident Indian wants to purchase land whose value exceeds Rs.50 lakh, they can claim TDS of 1% provided they furnish their PAN details.

What is the Role of a PAN Card in Property Registrations?

If you are taking part in transactions involving immovable properties, it is important to include a PAN card for thorough documentation. This requirement applies to various activities, including but not limited to buying or selling properties, leasing out spaces or lands, and the formal process of property registration.

• PAN cards are specially designed for Indian citizens and play a major role in recording and documenting financial transactions.
• It serves as an important tool for the Income Tax Department, enabling them to monitor an individual's income, investments and borrowings.
• In property transactions, both buyers and sellers must provide their PAN card numbers to the registrar overseeing the transaction.
• This ensures a transparent and traceable record of financial involvement in property dealings.

What are the Scenarios in Which PAN Card Details are Mandatory?

Here are some common scenarios where quoting PAN details is mandatory during property transactions.

Agreement of sale or purchase

• If the value of the immovable property is Rs. 10 lakh or more (or the applicable stamp duty value, where applicable), the parties involved are generally required to provide their PAN details while executing the sale or purchase agreement.
• This helps ensure that high-value property transactions are properly documented and reported.

Transactions exceeding Rs. 50 lakh 

• For property transactions exceeding Rs. 50 lakh, the buyer is required to deduct 1% TDS (or the applicable rate under the prevailing tax laws) before making the payment to the seller.
• If the seller does not furnish a valid PAN, TDS may be deducted at a higher rate, as prescribed under the Income Tax Act.

Is an e-PAN Valid for Property Registration?

Yes. As per the Income Tax Department, a digitally signed e-PAN is a valid proof of PAN and is generally accepted wherever PAN is required, subject to the requirements of the concerned authority.

• e-PAN cards contain a digitally signed QR code that stores the holder's demographic details.
• The QR code helps verify the authenticity of the PAN and makes the e-PAN equivalent to a physical PAN card for most official purposes.
• The acceptance of e-PAN supports the Government of India's digital initiatives by making documentation more convenient while maintaining security and authenticity.

However, before visiting the Sub-Registrar Office, it is advisable to check whether the concerned authority accepts a digitally signed e-PAN or requires a printed copy.

Do NRIs Require a PAN Card for Property Registration in India?

A PAN card is not mandatory for every NRI. However, NRIs involved in property transactions in India are generally required to obtain a PAN card to comply with Indian tax laws and complete tax-related formalities.

An NRI should have a PAN card if:

• They are planning to buy or sell property in India.
• They are required to pay or claim TDS related to a property transaction.
• They are planning to invest in mutual funds or other taxable financial instruments in India.
• They have a source of income that is taxable in India.
• They are planning to transfer funds received from property transactions in India to their NRE or NRO accounts.

Note: While NRIs are permitted to purchase residential and commercial properties in India, they cannot purchase agricultural land, plantation property, or farmhouses, except in specific cases permitted under applicable FEMA regulations.

What documents are Required for Property Registration?

Here is the list of documents needed for property registration.

• Proof of Ownership (Copy of Old Sale Deed)
  • This serves as the basis of the property registration process. 
  • It not only establishes clear ownership but also provides a historical record tracing the property's ownership.
  • The old sale deed is a crucial piece of evidence that outlines a link to the property's past transactions, ensures legal clarity, and validates the current ownership.
• PAN (Permanent Account Number) card
  • A PAN card is necessary for transactions exceeding Rs. 10 lakhs. 
  • This also functions as a unique identifier that helps to track and monitor financial transactions.
  • Additionally, property owners who provide their PAN cards can avail a 5% tax deduction on rental income exceeding INR 50000.
  • All of this makes the PAN card a crucial element in both legal compliance and financial benefits.
• Identification Proof
  • These include documents such as a driving license, Aadhaar card, or government-issued identity card.
  • Such documents help in authenticating the individuals participating in the transaction while contributing to the overall security and transparency of the process.
  • Ensuring the identities of the concerned parties is an important step in the property registration process.
• No Objection Certificate (NOC) 
  • An NOC is important because it confirms the absence of objections from relevant parties during property transfer.
  • It reduces potential conflicts and ensures a smooth transition of ownership by confirming the other concerned parties have given their consent and have no issues.
• Witness Identification Number
  • If witnesses are involved in the property transaction, their proof of identity adds credibility to their presence and testimony. 
  • This contributes to the overall authentication of the transaction process.
• Property Documents
  • Even though these are not as important as the previously mentioned documents, a visual representation of the property is necessary for a better understanding.
  • This allows a detailed illustration of the property's layout and features, helping to provide a clearer depiction of the asset being transacted.

Conclusion

A PAN card plays a major role in property registration, especially in high-value real estate transactions. It helps ensure transparency, simplifies tax compliance, and fulfils the legal requirements prescribed under the Income Tax Act. Before buying or selling a property, make sure your PAN details are accurate and readily available to avoid unnecessary delays during registration.

If you do not have a PAN card or need assistance with a new PAN application, PAN correction, or other documentation related to property transactions in India, Visament can help simplify the process with end-to-end support. Our experts guide you through every step, helping you complete the required formalities accurately and efficiently so you can proceed with your property transaction with confidence.