Income Tax Draft: PAN Rule Changed for Property

Buying or selling property below ₹20 lakh may soon become simpler. Under the Draft Income Tax Rules, 2026, issued by the Income Tax Department, PAN disclosure will not be mandatory for immovable property transactions valued below ₹20 lakh. The current limit stands at ₹10 lakh. If implemented, this move will ease compliance for smaller property deals while continuing strict reporting for higher value transactions, including gifts and joint development arrangements that cross the revised threshold.

Introduction

The proposed new income tax draft rules bring a significant change to property transaction compliance in India. At present, any purchase or sale of immovable property above ₹10 lakh requires quoting a Permanent Account Number. The draft rules propose raising this threshold to ₹20 lakh. This means smaller property transactions may soon proceed without mandatory PAN disclosure.

The move aims to align tax compliance requirements with rising real estate values across cities and towns. It also seeks to maintain transparency in higher-value transactions while easing documentation burdens for modest buyers.

Latest Update

• The Income Tax Department has released Draft Income Tax Rules, 2026, proposing to raise the PAN reporting threshold for immovable property transactions from ₹10 lakh to ₹20 lakh. Smaller transactions may no longer require mandatory PAN disclosure.
• The draft rules expand clarity on property transfers through gifts and joint development agreements. These arrangements will fall under PAN compliance if the transaction value meets the revised threshold.
• Experts believe the revision reflects increased property prices across urban and semi-urban markets. The existing ₹10 lakh limit was considered outdated in many regions.
• Higher value transactions at or above ₹20 lakh will continue to require PAN disclosure. Authorities aim to ensure traceability of significant property transfers.

What Exactly Is Changing in the New Income Tax Draft Rules?

The Draft Income Tax Rules, 2026, propose increasing the mandatory PAN disclosure threshold for property transactions from ₹10 lakh to ₹20 lakh. If the property deal value is below ₹20 lakh, PAN may not be required. However, transactions of ₹20 lakh or more will still require PAN reporting.

Currently, any purchase or sale of immovable property exceeding ₹10 lakh triggers a requirement to furnish PAN. This applies to houses, plots, and other immovable assets. The proposed revision doubles this threshold.

Here is a quick overview:

Particulars	Current Rule	Proposed Draft Rule
PAN required for property deals above	₹10 lakh	₹20 lakh
PAN required below the threshold	Yes	No
Applies to gifts and joint development	Not clearly defined in earlier framework	Explicitly covered if value exceeds ₹20 lakh

The proposed rule recognizes that ₹10 lakh is no longer considered a high value transaction in many property markets. In several cities, even small plots exceed that amount.

If adopted, the new rule will reduce compliance paperwork for modest property transactions while retaining oversight for significant deals.

Why Has the PAN Disclosure Threshold Been Increased?

The threshold has been raised to reflect rising property prices and to reduce unnecessary compliance for smaller transactions. The earlier ₹10 lakh limit often captured modest deals, especially in growing cities.

Over the last decade, real estate values have increased substantially. Even in tier two and tier three cities, residential plots and small apartments frequently cross ₹10 lakh. As a result, many middle-income buyers were required to complete PAN disclosure even for routine transactions.

Key reasons behind the revision include:

1. Inflation and rising land values
2. Expanding urbanization
3. Simplifying compliance for low-value buyers
4. Reducing administrative burden

In practical terms, the new ₹20 lakh threshold better aligns with current market realities. For example:

• In metropolitan areas, average property values are far above ₹20 lakh.
• In smaller towns, entry-level properties often fall between ₹12 lakh and ₹18 lakh.

Under the old rule, even these smaller purchases triggered PAN reporting. The new draft aims to balance compliance with practicality.

How Will This Change Impact Property Buyers and Sellers?

Buyers and sellers involved in transactions below ₹20 lakh may experience simpler documentation requirements. However, deals at or above ₹20 lakh will continue to require PAN disclosure and tax reporting compliance.

For small ticket property buyers, especially in semi-urban markets, this move reduces paperwork. It may also speed up transaction processing in some cases.

Here is how different groups may be affected:

For Small Buyers

• No mandatory PAN submission for deals below ₹20 lakh
• Reduced documentation stress
• Easier compliance in low-value purchases

For Sellers

• Fewer formalities for modest sales
• Less administrative back and forth

For Higher Value Transactions

• PAN remains compulsory
• Reporting remains unchanged
• Tax scrutiny remains intact

Comparison of compliance burden:

Category	Below ₹10 Lakh	₹10 to ₹20 Lakh	Above ₹20 Lakh
Current PAN Rule	Not required	Required	Required
Proposed PAN Rule	Not required	Not required	Required

This clearly shows the relief zone now expands from ₹10 lakh to ₹20 lakh.

Do Gifts and Joint Development Agreements Also Require PAN?

Yes, under the draft rules, property transfers through gifts and joint development agreements will require PAN disclosure if the transaction value is ₹20 lakh or more.

Earlier frameworks did not always clearly define such arrangements within the PAN reporting structure. The new draft rules aim to bring more clarity.

What is covered?

1. Property transfers by way of gift
2. Joint development agreements between landowners and developers
3. Certain structured real estate arrangements

If the underlying value of the property in such arrangements crosses ₹20 lakh, PAN compliance becomes mandatory.

This inclusion ensures that indirect or non-traditional property transfers do not escape reporting when significant value is involved.

It strengthens transparency in:

• Redevelopment projects
• Land pooling models
• Developer landowner revenue-sharing deals

This means that while small, straightforward sales may see reduced compliance, structured property transactions above ₹20 lakh remain within the reporting net.

What Remains Unchanged Under the Draft Rules?

All property transactions valued at ₹20 lakh or above will continue to require mandatory PAN disclosure. The tax authorities will maintain oversight of high-value real estate deals.

The core objective of linking property transactions with PAN is to:

• Match property records with income disclosures
• Track high-value asset acquisition
• Prevent tax evasion

The draft rules do not relax compliance for significant property transfers. Instead, they refine the threshold.

Key unchanged aspects:

1. PAN required for deals of ₹20 lakh and above
2. Tax traceability mechanisms remain active
3. Income tax scrutiny powers remain intact

For metropolitan markets, where property values often exceed ₹50 lakh or even ₹1 crore, the compliance environment remains largely the same.

In essence, the reform is selective relief rather than a broad deregulation.

What Happens Next Before the Rule Becomes Effective?

The Draft Income Tax Rules, 2026 are currently open for review and feedback. The government may revise provisions before issuing the final notification.

Draft rules are not immediately enforceable. The process typically involves:

1. Stakeholder consultation
2. Industry feedback
3. Possible revisions
4. Final notification

Until the final rules are officially notified, the existing ₹10 lakh threshold remains applicable.

Property buyers and sellers should:

• Monitor official notifications
• Consult tax professionals before structuring transactions
• Avoid assuming automatic applicability

Once finalised, the rule may significantly reshape compliance for smaller property transactions across India.

Key Takeaways

• PAN may not be required for property transactions below ₹20 lakh if draft rules are adopted.
• The current threshold is ₹10 lakh.
• Gifts and joint development agreements are explicitly covered if the value exceeds ₹20 lakh.
• Higher value transactions remain fully reportable.
• The draft rules are not yet final and may change after consultation.

Conclusion

The proposed revision in the new income tax draft rules marks a practical shift in property transaction compliance. By raising the PAN disclosure threshold from ₹10 lakh to ₹20 lakh, the Income Tax Department aims to ease documentation requirements for smaller deals while maintaining transparency for significant property transfers.

If implemented, the move could simplify transactions for buyers in smaller cities and semi-urban areas. At the same time, high-value deals, including gifts and joint development arrangements, will remain firmly within the reporting framework. As the draft rules undergo review, stakeholders should stay informed and prepare for potential changes in real estate compliance norms.