Changes to income tax in 2026: Declare your relationship with your landlord; you only need a PAN for property deals of ₹20 lakh or more
By Bricksnwall | 2026-04-02
Changes to tax laws and stricter HRA disclosure standards may affect people who rent and own homes. PAN is required for assets worth more than ₹20 lakh, while interest benefits are limited at ₹2 lakh.
Several important changes will now affect property sales and home loan advantages, such as tougher requirements on what must be disclosed and new tax rules: People who want to claim HRA must now tell the government how they are related to the landlord. Renters in Bengaluru, Hyderabad, Pune, and Ahmedabad can also get a larger 50% exemption cap. If you want to buy or sell property worth more than ₹20 lakh, you and the other person must have a PAN. This requirement also applies to gifts and joint development agreements.
TDS can now be deposited using the buyer's PAN for NRI transactions. This means that individual homebuyers don't have to register for a TAN every time they make a purchase, which makes it easier for them to follow the rules. Starting on April 1, 2026, the ₹2 lakh yearly deduction limit on home loan interest will include pre-construction interest on homes that are occupied by the owner.
The government's plan for taxing real estate beyond April 1, 2026, is clearly more about stability than trying new things. Alay Razvi, Managing Partner at Accord Juris, adds, "There are no big changes to capital gains or property taxes, which sends a strong message of policy continuity to both investors and homebuyers."
When you claim HRA, you should talk about your connection with your landlord.
Form 124's requirement to disclose landlord relationships makes it much harder to follow the rules, especially when rent is given to family members.
"These kinds of arrangements are still allowed, but they will now be looked at more closely." Deepesh Chheda, a partner at Dhruva Advisors, says, "Taxpayers should make sure they have the right paperwork, like a formal rent agreement, proof of a bank transfer, the landlord's PAN details, and reasonable rent benchmarking to lower the risk of going to court."
You can still rent from your parents or relatives and get HRA, but you have to tell the landlord about your relationship with them and give them the proof they need.
If you live in Bengaluru, Hyderabad, Pune, or Ahmedabad, you can get more HRA deductions.
The 50% HRA exemption now applies to cities like Hyderabad, Pune, Ahmedabad, and Bengaluru. This directly affects how much money people take home, especially for those who were limited by the 40% maximum even though they were paying higher rents.
Deepesh Chheda, a partner at Dhruva Advisors, says, "In many cases, people could claim a higher exemption but were limited by the lower threshold. This change now lets them use their eligible HRA and fully reduce their taxable income."
If you make ₹1 lakh a month, the exemption level goes up from ₹40,000 to ₹50,000. This might save you ₹35,000–₹40,000 in taxes per year, depending on your tax status.
You only need a PAN for property transactions over ₹20 lakh
If the transaction value is more than ₹20 lakh, both the buyer and the seller must provide their PAN for the sale or purchase of real estate (land, building, or rights). The new laws clearly address property transfers through gifts and collaborative development agreements that are worth less than ₹20 lakh.
Tusi Kumar, a partner at Singhania & Co., says, "If the Stamp Valuation Authority (Circle Rate) values the property at more than ₹20 lakh, PAN reporting is required, even if the actual transaction value is lower."
PAN-based TDS for selling NRI property
The Finance Minister has made it easier for buyers to pay TDS on NRI property sales by letting them use their PAN instead of having to register for a TAN once. This removed a merely procedural annoyance that generated delays and technical defaults without adding any meaningful compliance value. It makes things easier for real one-time homeowners while still collecting taxes, which is how tax collection should work.
Cap on interest before construction
The New Income Tax Act, 2025, modifies how pre-construction interest on house loans for self-occupied properties is treated starting on April 1, 2026. The deduction for interest paid during the building phase is now part of the overall ₹2 lakh yearly interest deduction limit.
You must claim this pre-construction interest in five equal payments over five years, starting with the year the work is finished. But it can't be "stacked" anymore to raise the total interest deduction in any one year above ₹2 lakh.
Starting on April 1, 2026, borrowers will no longer be able to combine substantial pre-construction interest payments into a high-income year. Instead, they will have to spread the advantage out over the same annual limit as applies to conventional home loan interest.
Source: Hindustan Times
