Why must PAN details be verified before registration?

Verification of Permanent Account Number (PAN) details before the registration of property is a mandatory step enforced under Indian tax and registration laws to ensure transparency, traceability, and compliance in high-value real estate transactions. It is a safeguard against tax evasion, benami transactions, and identity fraud.

1. Mandatory Under Income Tax Law for High-Value Transactions

• As per Rule 114B of the Income Tax Rules, 1962, quoting of PAN is compulsory for property transactions where the sale value exceeds ₹10 lakh or the stamp duty value exceeds ₹10 lakh, whichever is higher.
  
• Both buyer and seller must quote PAN in the sale deed and supporting registration documents.
  

2. TDS Deduction and Compliance Under Section 194-IA

• For transactions over ₹50 lakh, the buyer is required to deduct 1% TDS under Section 194-IA of the Income Tax Act.
  
• Verification of PAN ensures:
  
  • Proper filing of Form 26QB
    
  • Generation of Form 16B
    
  • Accurate credit of TDS to the seller’s account
    

3. Preventing Identity Fraud and Misrepresentation

• PAN verification helps prevent:
  
  • Fake identity usage
    
  • Sale through impersonation or forged documents
    
  • Incorrect reporting of income under a different name
    
• It establishes the legal identity of both parties and links them to the transaction digitally.
  

4. Cross-verification Through Government Portals

• PAN is verified using:
  
  • Income Tax Department’s PAN database
    
  • NSDL or UIDAI portals
    
  • Digital signatures and e-KYC systems used by Sub-Registrar Offices
    
• Any mismatch in name, number, or date of birth can stall the registration process or flag the transaction for review.
  

5. Linkage to Financial and Tax Records

• PAN acts as a unique identifier linking the property transaction to:
  
  • Annual Information Statement (AIS)
    
  • Form 26AS
    
  • Capital gains declaration in the seller’s ITR
    
• This enables the Income Tax Department to track asset ownership and gain patterns for audit and compliance purposes.
  

6. Support for Anti-Benami Transaction Monitoring

• PAN verification is critical to detect and prevent benami property transactions, where the property is purchased in the name of a proxy but funded by someone else.
  
• It ensures transparency in the source of funds and the actual ownership trail.
  

7. Requirement for Financial Institutions and Legal Clearances

• If the transaction involves:
  
  • Home loans or mortgages
    
  • Institutional funding or third-party validation
    
• PAN verification is required for loan disbursement, legal due diligence, and CIBIL reporting.
  

8. Enabling Online Registration and Tax Filing Integration

• States that offer digital property registration or e-stamping platforms mandate PAN entry as part of:
  
  • User login
    
  • Document validation
    
  • Auto-filling of registration forms
    
• The PAN enables seamless linking with GST, Aadhaar, and banking data for audit trails.