Property Transactions where PAN Card is Necessary
Jun 19, 2018 Legal Guidance
PAN card which means an individual’s Permanent Account Number is an essential document and is compulsory for many financial and non-financial transactions that include buying or selling properties or even leasing it out.
So, here we have listed some cases where it is necessary and the consequences of not providing it.
PAN card is necessary while purchasing a property. If someone buys an immovable property for a value more than Rs 50 lakhs, other than agricultural land from a person who is an Indian resident then 1 percent tax needs to be deducted at the time of the payment to the builder or seller. Usually one needs to have a TAN (tax deduction account number) to deposit TDS (tax deducted at source). But the law exempts individual tax payers from having a TAN, rather they need to have a valid PAN in order to deposit the TDS. Also according to the present law, the seller is required to furnish his or her valid PAN. If the seller fails to do so then the buyers are required to deduct tax at the rate of 20 percent instead of 1 percent.
In terms of rent, if an individual is paying rent for an immovable property whether its a land, commercial property, residential or even a factory premises, that exceeds Rs 1.80 lakhs in a year, then 10 percent tax should be deducted from the rent. If the landlord does not have or denies to provide his or her landlord, then the tenant has to deduct 20 percent tax on the rent. In such case, the landlord would not get credit for the TDS. Hence the landlord would have to face double trouble as 20 percent tax would be deducted from the rent instead of 10 percent and also the landlord would not get the credit for the 20 percent TDS. In addition, failure of an individual to intimate his valid PAN to the deductor as per the law could also attract a penalty of Rs 10,000.
An individual can enjoy rental income without the tax deduction as per the law but in such case, he or she has to furnish Form No 15G if you are below the age of 60 and Form No 15H in case of a senior citizen. If a valid PAN is not mentioned in the form, then Forms 15H and 15H are considered as invalid. And consequently, the payer of income need to deduct tax at a higher rate of 20 percent on the rent.
According to the existing law, an individual can make an application to the TDS officer to issue a certificate that entitles a person to receive the rent without TDS or TDS at a lower rate than the 10 percent. But this form would be also considered invalid if correct PAN is not provided.
The law also asks an individual to quote buyer’s and seller’s PAN for any transaction related to the immovable property where the value is more than Rs 5 lakhs. The registrar who registers the property needs to ensure that the PAN numbers are mentioned on the documents related to the sale and purchase of the respective property. If the PAN is provided, the registrar can refuse to register the document for sale or purchase. However, if a person does not have a PAN card then he or she can submit Form No 60 along with their address proof like driving licence, passport.
In terms of rent, if an individual is paying rent for an immovable property whether its a land, commercial property, residential or even a factory premises, that exceeds Rs 1.80 lakhs in a year, then 10 percent tax should be deducted from the rent. If the landlord does not have or denies to provide his or her landlord, then the tenant has to deduct 20 percent tax on the rent. In such case, the landlord would not get credit for the TDS. Hence the landlord would have to face double trouble as 20 percent tax would be deducted from the rent instead of 10 percent and also the landlord would not get the credit for the 20 percent TDS. In addition, failure of an individual to intimate his valid PAN to the deductor as per the law could also attract a penalty of Rs 10,000.
An individual can enjoy rental income without the tax deduction as per the law but in such case, he or she has to furnish Form No 15G if you are below the age of 60 and Form No 15H in case of a senior citizen. If a valid PAN is not mentioned in the form, then Forms 15H and 15H are considered as invalid. And consequently, the payer of income need to deduct tax at a higher rate of 20 percent on the rent.
According to the existing law, an individual can make an application to the TDS officer to issue a certificate that entitles a person to receive the rent without TDS or TDS at a lower rate than the 10 percent. But this form would be also considered invalid if correct PAN is not provided.
The law also asks an individual to quote buyer’s and seller’s PAN for any transaction related to the immovable property where the value is more than Rs 5 lakhs. The registrar who registers the property needs to ensure that the PAN numbers are mentioned on the documents related to the sale and purchase of the respective property. If the PAN is provided, the registrar can refuse to register the document for sale or purchase. However, if a person does not have a PAN card then he or she can submit Form No 60 along with their address proof like driving licence, passport.
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