PAN Card for Property Registration: Is It Mandatory

In Which Cases Is a PAN Card Mandatory?

To control any fraudulence as well widen the tax base, the Indian government has made it compulsory to quote PAN Card if an individual wants to proceed with the following kind of property transactions in India.

1. Purchase or Sell Immovable Property Above ₹10 lakh - The registration for a sale or purchase of a property whose value is above ₹10 lakh is not possible without both the seller and the buyer quoting their PAN Cards.
2. To Claim TDS from Rental Income - For rentals of all types of immovable property, tenants can enjoy a 5% TDS by providing their PAN details on rents above ₹50,000. In case, the landlord fails to furnish their PAN Card; the TDS rises to 20%.
3. To Claim TDS is the Buyer Spends More Than 50 Lakh to purchase an immovable property - If a residential Indian wants to purchase a land whose value exceeds 50 lakh, they can claim a TDS of 1% provided they can furnish their PAN details during such claims.

Role of PAN Card in Property Registration

When engaging in transactions involving immovable properties, it is crucial to incorporate a PAN (Permanent Account Number) Card for thorough documentation. This requirement extends to various activities, including but not limited to the buying or selling of properties, leasing out spaces or lands, and the formal process of property registration.

The PAN Cards, specifically designated for Indian citizens, play a vital role in recording and documenting financial transactions. This documentation serves as a valuable tool for the Income Tax Department, enabling them to effectively monitor an individual's income alongside their investments and borrowings. 

In the realm of property transactions, both buyers and sellers find themselves obligated to furnish their PAN Card Numbers to the registrar overseeing the transaction. This step ensures a transparent and traceable record of financial involvement in property dealings. Now, let's explore the specific scenarios in which providing PAN details is mandatory: 

1. Agreements of Sale or Purchase: In instances where the value of immovable assets exceeds ₹10 lakh, it becomes mandatory for the parties involved to provide their PAN Card Numbers. This requirement ensures that significant transactions are documented thoroughly. 
2. Transaction Exceeding ₹50 Lakh: For transactions surpassing the threshold of ₹50 lakh, buyers are required to adhere to an additional step. They must deduct 1% TDS (Tax Deducted at Source) and remit the deducted amount to the Income Tax Department. Failure to comply with this TDS requirement can result in an escalation of the deduction rate to 20%. 

Is e-PAN Valid for Property Registration?

As per government notifications, there has been a significant development regarding the acceptance of digitally signed PAN Cards for property registration. This update is articulated in the amendments to clause (c) subsection (8) of Section 139A of the Income Tax Act, 1961, and sub-rule (6) of Rule 114 of the Income Tax Rules, 1962. Notably, the government introduced modifications to sub-rule (6) of Rule 114 of the Income Tax Rules through GFR 1128(E), dated 19/11/2018. The key highlight of this update is the recognition and validation of e PAN Cards for property registration purposes. These electronically generated PAN Cards are equipped with a verified QR code containing both demographic and biometric data.

This QR code functionality ensures that e-PAN Cards operate at par with their traditional, physical counterparts. This move towards accepting e-PAN Cards aligns with the broader digital transformation initiatives and aims to facilitate a seamless and efficient process for property transactions. The inclusion of biometric data in the QR code enhances the security and authenticity of the digital PAN Card, making it a reliable and accepted form of documentation for property registration.

Do NRIs Need PAN Card for Property Registration in India?

PAN Card is not mandatory for an NRI as they are non-residential Indians with Indian passports; especially if they do not plan to invest money into any business in India.

However it is mandated by the government to have a PAN Card if,

1. An NRI wants to invest in mutual funds in India.
2. They have a source of income in India that is taxable.
3. The non-residential Indian wants to transfer the funds received from the property transactions in India to their NRE or NRO accounts. To buy a property they do not necessarily need a PAN Card as per rule 114C. Since the process of getting a PAN Card is easy, it is often recommended to get one to ease the property registration process. Alternatively, a non-residential Indian can also provide Form 80 during the buying of a flat, house, or land and the registration of such sales or purchase. In case of selling a property or possession of any immovable property, an NRI has to pay the tax levied on the accrued income for which they also need to quote their PAN Card.

However, since NRIs are not mandated to provide their PAN Card details to proceed with any kind of property registration, the Government of India also restricts them from purchasing any farmland, plantation, or agricultural property in India.

Documents Required for Property Registration

The following documents play a crucial role in the property registration process: 

1. Proof of Ownership (Copy of Old Sale Deed): This document serves as the bedrock of the property registration process. It not only establishes unequivocal ownership but also provides a historical record tracing the property's ownership lineage. The old sale deed is a critical piece of evidence, offering a tangible link to the property's past transactions, ensuring legal clarity, and validating the current ownership.
2. Permanent Account Number (PAN): The inclusion of a PAN is imperative for transactions exceeding INR 10 lakhs. Beyond being a legal requirement, the PAN is a unique identifier that aids in tracking and monitoring financial transactions. Moreover, property owners quoting their PAN can avail themselves of a 5% tax deduction on rental income surpassing INR 50,000. This dual significance makes the PAN a pivotal element in both legal compliance and financial benefits.
3. Identification Proof (Driving Licence, Aadhaar Card, or Government-Issued Identity Card): Ensuring the identity of the parties involved is a foundational step in the property registration process. Valid identification proofs such as driving licences , Aadhaar cards, or government-issued identity cards authenticate the individuals participating in the transaction, contributing to the overall legitimacy and security of the process. 
4. No Objection Certificate (NOC): The NOC holds paramount importance as it confirms the absence of objections from relevant parties for the property transfer. This certificate mitigates potential conflicts and ensures a smooth transition of ownership by affirming that other concerned parties have given their consent or have no issues with the property transfer.
5. Witness Identification Proof: In cases where witnesses are involved in the property transaction, their identification proof adds a layer of credibility to their presence and testimony. This step contributes to the overall authentication of the transaction process.
6. Visual Representation of the Property: While not as critical as the aforementioned documents for legal compliance, a visual representation of the property is essential for a comprehensive understanding. It provides a detailed illustration of the property's layout and features, aiding in a clearer depiction of the asset being transacted.

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