In a significant development in the Indian real estate market, both property buyers and sellers are now required to link their Aadhaar with their PAN card. Failure to do so can result in a substantial increase in the tax rate on property sales, jumping from 1% to 20%. The Income Tax department has initiated the process by sending notices to buyers of properties over Rs. 50 lakhs, emphasizing the importance of this digital connection. According to the Income-Tax Act, buyers in transactions exceeding Rs 50 lakhs must pay 1% TDS to the Central Government, making it crucial for both parties to ensure compliance to avoid financial penalties. The recent enforcement serves as a reminder of the evolving dynamics and financial implications of Aadhaar-PAN linkage in property transactions in India.
In the world of buying and selling property in India, there's a new rule that both buyers and sellers must follow. It's not just about paperwork anymore – now, it's imperative for both the person buying the property and the person selling it to link their Aadhaar with their PAN card. If they don't, there's a big financial consequence: the tax rate on the property sale can jump from the usual 1% to a hefty 20%.
The Income Tax department has recently begun sending notices to buyers who've purchased properties over Rs. 50 lakhs, reminding them to make sure this linking is done. This change highlights how important this digital connection is in property deals, especially after the deadline for linking Aadhaar and PAN cards has passed.
In accordance with the regulations of the Income-Tax Act, buyers of properties valued at Rs 50 lakh or more are mandated to pay 1% TDS to the Central Government, with the seller receiving 99% of the total amount. Subsequently, the seller can claim this amount as credit. Therefore, it becomes imperative for a buyer to ensure that the seller has completed this formality to avoid having to pay a fine.
Approximately six months after the deadline for linking Aadhaar and PAN cards elapsed, the Income Tax (I-T) department has commenced issuing notices to buyers who have acquired properties exceeding Rs. 50 lakhs, instructing them to pay a 20% TDS on their purchase. Chartered accountants highlight that numerous property buyers have received such notices due to sellers failing to link their PAN with Aadhaar.
In response, chartered accountants emphasize the importance of property sellers, along with contractors, brokers, and professionals, ensuring the linkage of their PAN and Aadhaar. In numerous instances, the seller's PAN card becomes inactive because it is not linked with Aadhaar. Consequently, buyers are receiving notices several months after acquiring a property valued at over Rs 50 lakh from a seller whose PAN card has been deactivated.
In conclusion, the evolving dynamics of property transactions in India underscore the significance of the Aadhaar-PAN linkage, transforming it from a procedural formality into a financial linchpin. The recent enforcement by the Income Tax department serves as a reminder to all stakeholders involved in real estate dealings, emphasizing the need for compliance with the updated regulations.
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