INVC NEWS
New Delhi : The Indian real estate sector has witnessed a significant transformation with the introduction of mandatory linking of Permanent Account Number (PAN) and Aadhaar. This regulatory requirement has been instituted to ensure greater transparency and to curb tax evasion in property transactions. As a prospective property buyer or seller, understanding the implications of this requirement is crucial for a smooth and compliant transaction process.
Why Linking PAN and Aadhaar is Mandatory in Property Transactions
Linking PAN with Aadhaar has become a prerequisite for property transactions in India. This linkage plays a vital role in curbing tax evasion and ensuring that the transactions are transparent and accountable. The Income Tax Act mandates that for any property transaction exceeding INR 50 lakhs, the PAN of the seller and buyer should be linked with their respective Aadhaar numbers. Failing to adhere to this norm can lead to significant legal and financial repercussions.
The Impact of Non-Compliance
Non-compliance with the PAN-Aadhaar linking requirement can lead to substantial inconveniences and financial burdens for both parties involved in the transaction. If the PAN and Aadhaar are not linked, the buyer is obligated to deduct 20% Tax Deducted at Source (TDS) instead of the standard 1% on transactions above INR 50 lakhs. This increased TDS can considerably inflate the cost for the buyer and reduce the net proceeds for the seller, thereby affecting the overall viability of the transaction.
Step-by-Step Process for Linking PAN and Aadhaar
- Visit the Income Tax e-Filing Website: The first step is to visit the official e-filing website of the Income Tax Department.
- Enter the Required Details: Provide your PAN and Aadhaar number along with your name as per the Aadhaar card.
- Verification Process: After submitting the details, a One Time Password (OTP) will be sent to your registered mobile number for verification.
- Final Submission: Post verification, submit the form, and your PAN will be successfully linked with your Aadhaar.
Deadline and Consequences of Missing It
The government had set a deadline for linking PAN with Aadhaar. Missing this deadline can render the PAN inoperative, leading to complications in financial transactions, including property dealings. Moreover, a penalty may be imposed for linking PAN with Aadhaar post the deadline.
Notices to Buyers and Sellers
The Income Tax Department has been actively issuing notices to property buyers and sellers in cases of non-compliance. These notices typically mandate the payment of the differential TDS, which can be substantially higher if the PAN and Aadhaar are not linked.
Understanding the Legal Framework
Under Section 139 AA of the Income Tax Act, it is mandatory to link PAN with Aadhaar for filing Income Tax Returns (ITR). However, several cases have emerged where this linkage is missing, prompting the Income Tax Department to issue notices.
Linking PAN and Aadhaar: A Small Step with Big Implications
The process of linking PAN with Aadhaar is a straightforward yet crucial step in property transactions. It ensures compliance with tax laws and smoothens the transaction process. Ignoring this step can lead to severe financial and legal consequences.
The Bottom Line
For anyone involved in property transactions, be it buying or selling, ensuring the linkage of PAN with Aadhaar is not just a regulatory formality but a necessary step towards a transparent and hassle-free transaction. Adhering to this requirement will safeguard you against unnecessary tax burdens and legal complications.
