Why PAN Card is Mandatory for Property Transactions Over ₹10 Lakh – Rules, Risks & Legal Checklist

Here’s What You Must Know Before Signing That Agreement

Imagine this: you're about to close a ₹50 lakh deal on your dream property. The paperwork is nearly done, your home loan is ready, the seller is waiting – and then the sub-registrar's office hits pause:

“Please provide the PAN card for both parties.”

You only have one. The other party forgot. The deal now faces delays, scrutiny, or even cancellation.

Sound dramatic? It’s not.

In real estate transactions above ₹10 lakh, your PAN (Permanent Account Number) is more than just a number – it's a critical compliance tool. It can determine:

• Whether your agreement is legally valid
• Whether your property can be registered
• Whether your deal stays off the radar of the tax department

Here’s What We’ll Uncover in This Guide:

• How quoting PAN protects you from penalties and registration delays
• Why agreements of sale must include PAN for both buyer and seller
• Real-life consequences of omitting PAN in high-value deals
• Key documents that require PAN – and what happens if it's missing
• A compliance checklist to make sure you're 100% transaction-ready

Before diving into the legal steps, it's smart to check properties that already meet PAN and documentation norms — it can save you time and trouble later.

Understanding the Agreement of Sale or Purchase

An Agreement of Sale or Purchase is the first formal step in a property transaction. It outlines:

• The agreed sale price
• Payment schedule and advance (token money)
• Responsibilities of both buyer and seller
• Conditions for cancellation or default

This agreement does not transfer ownership, but it holds legal weight – especially when disputes arise. For high-value deals, it's usually registered with the local sub-registrar.

Why PAN Is Mandatory for Property Deals Over ₹10 Lakh

Under the Income Tax Act, quoting PAN is compulsory for all transactions involving immovable property valued at ₹10 lakh or more. This includes:

• Residential apartments, houses, villas
• Commercial shops or office spaces
• Land, plots, and farmland

What’s the Purpose Behind This Rule?

• Stop tax evasion: PAN links transactions to the buyer/seller’s tax history
• Curb black money: Eliminates unaccounted "cash-only" deals
• Enable tracking: Helps authorities monitor large asset purchases
• Builds trust: Encourages formal, compliant property transactions

Who Must Provide PAN?

The PAN rule applies to all parties involved in the transaction:

• Buyer and Seller – PAN must be quoted in:
• Sale Agreement
• Sale Deed
• Property registration documents
• Power of Attorney holders – If someone is acting on behalf of the buyer or seller, their PAN must also be provided.

What Happens If You Don’t Quote PAN?

Skipping or incorrectly quoting PAN in deals above ₹10 lakh can lead to:

• Denial of registration – Sub-registrar may reject the document
• Penalty of ₹10,000 – As per Section 272B of the Income Tax Act
• Red flags for tax authorities – The deal may be flagged for audit or scrutiny
• Loan disbursement issues – Lenders require PAN for verification and KYC

Use the home loan calculator to estimate your EMI based on loan amount, interest rate, and tenure before finalizing any property deal.

How This Rule Benefits the Market

PAN disclosure is part of a larger effort to modernize and digitize India’s property market. It:

• Discourages benami ownership
• Ensures capital gains and stamp duty are properly taxed
• Creates digital footprints for easier verification
• Builds confidence for NRIs and investors in the formal market

Quick Legal Checklist: Buying or Selling Above ₹10 Lakh? Do This First

Before you sign any agreement:

✔️ Include PAN details of both parties

✔️ Ensure correct transaction value is recorded

✔️ Mention PAN in sale deed, stamp duty, and registration documents

✔️ If a POA is used, ensure their PAN is disclosed

✔️ Attach a copy of PAN cards in your supporting documents

Also read: How property ownership is legally transferred – full steps with real examples.

Final Thoughts: Don’t Leave PAN as an Afterthought

Whether you're buying your first flat or selling a piece of land, your PAN card is a non-negotiable part of the paperwork. It's a small step that saves you from big problems – legal disputes, tax penalties, and failed registrations.

Tip: Keep digital and physical copies of your PAN card ready before starting any property-related process.

Need expert help reviewing your documents? Speak with a real estate lawyer or property consultant familiar with registration and income tax laws – they can save you time, money, and a lot of stress.

If you’re looking for more insights like this, visit blog.maadiveedu.com – your trusted guide for real estate tips and legal clarity.

Need help finding the right property?

Explore curated listings today at www.maadiveedu.com – discover verified properties that match your needs.

Frequently Asked Questions (FAQ)

1. Is it mandatory to quote a PAN card for property transactions over ₹10 lakh?

Yes. As per the Income Tax Act, quoting PAN is mandatory for all immovable property transactions valued at ₹10 lakh or more. This includes both residential and commercial properties, as well as land.

2. Whose PAN card is required in a property deal?

The PAN card details of both the buyer and the seller must be included in:

• The Agreement of Sale
• The Sale Deed
• Registration documents

If a Power of Attorney (POA) holder is involved, their PAN is also required.

3. What happens if PAN is not quoted or is quoted incorrectly?

Failure to quote PAN or quoting it incorrectly can result in:

• Rejection of registration by the sub-registrar
• A penalty of ₹10,000 (under Section 272B of the Income Tax Act)
• Possible scrutiny or audit by tax authorities
• Issues with home loan disbursement

4. Does this apply to joint property transactions too?

Yes. In joint purchases or sales, each party involved must provide their PAN. Missing even one PAN can lead to legal and registration delays.

5. Is PAN needed if I’m gifting property, not selling it?

While gifting may not always involve a sale agreement, PAN is still advisable to include in registration documents to ensure compliance and clarity during property transfers.

6. Why is PAN important in property transactions?

PAN:

• Links the transaction to your tax identity
• Prevents tax evasion and black money circulation
• Enables formal verification by banks and registrars
• Builds credibility in high-value real estate deals

7. Can I still register a property without PAN if the value is below ₹10 lakh?

For property deals below ₹10 lakh, PAN is generally not mandatory, but some states or financial institutions may still request it for due diligence or KYC purposes.

8. Where should PAN be mentioned in the documents?

Make sure PAN is included in:

• The Agreement of Sale
• The Sale Deed
• Stamp duty and registration forms
• Supporting KYC documents (copies of PAN cards)

9. What if I don’t have a PAN card yet?

Apply immediately at: https://www.incometax.gov.in

Property registration and loan processes cannot move forward without it in deals above ₹10 lakh.

10. Does this rule affect NRIs or foreign investors?

Yes. NRIs must also provide their Indian PAN when involved in such transactions. It’s essential for tax compliance, repatriation of funds, and property registration.