From stricter disclosure norms to revised tax rules, several key changes will now shape property transactions and home loan benefits: Taxpayers claiming HRA must now disclose their relationship with the landlord, while renters in Bengaluru, Hyderabad, Pune, and Ahmedabad can avail a higher 50% exemption cap. PAN has become mandatory for both buyer and seller in property deals exceeding ₹20 lakh, and the rule also covers gifts and joint development agreements.
For NRI transactions, TDS can now be deposited using the buyer’s PAN, eliminating the need for a one-time TAN registration and easing compliance for individual homebuyers. From April 1, 2026, pre-construction interest on self-occupied homes will be subsumed within the overall ₹2 lakh annual deduction limit on home loan interest.
“From April 1, 2026, the government’s approach to real estate taxation is clearly about stability over experimentation. There are no headline changes to capital gains or property taxation, which sends a strong signal of policy continuity to both investors and homebuyers,” says Alay Razvi, Managing Partner, Accord Juris.
Mention relationship with landlord when claiming HRA
The introduction of mandatory disclosure of landlord relationships through Form 124 significantly raises the compliance bar, particularly where rent is paid to relatives.
“While such arrangements are permissible, they will now attract closer scrutiny. Taxpayers should ensure proper documentation, including a formal rent agreement, bank transfer evidence, PAN details of the landlord, and reasonable rent benchmarking to mitigate litigation risk,” says Deepesh Chheda, Partner, Dhruva Advisors.
This means you can still rent from your relatives or parents and claim HRA, but you must disclose the relationship with your landlord and provide the required evidence.
Avail higher HRA deductions if you stay in Bengaluru, Hyderabad, Pune, and Ahmedabad
The expansion of the 50% HRA exemption to cities like Hyderabad, Pune, Ahmedabad and Bengaluru has a direct impact on take-home income, particularly for taxpayers who were earlier constrained by the 40% cap despite paying higher rents.
“In many cases, individuals had the capacity to claim a higher exemption but were restricted by the lower threshold; this change now allows them to utilise their eligible HRA and reduce taxable income fully,” says Deepesh Chheda, Partner, Dhruva Advisors.
For a monthly basic salary of ₹ 1 lakh, the exemption limit increases from ₹40,000 to ₹50,000, potentially translating into annual tax savings of around ₹35,000– ₹40,000, depending on the tax bracket.
PAN needed only for property deals above ₹20 lakh
Both buyer and seller must furnish PAN for the purchase or sale of immovable property (land, building, or rights) if the transaction value exceeds ₹20 lakh. The new rules explicitly cover property transfers through gifts and joint development agreements within this ₹20 lakh threshold.
“If the Stamp Valuation Authority (Circle Rate) values the property above ₹20 lakh, PAN reporting is mandatory, regardless of the lower actual transaction value,” says Tusi Kumar, Partner, Singhania & Co.
PAN-based TDS for NRI property sales
By allowing TDS on NRI property sales to be deposited using the buyer’s PAN rather than requiring a one-time TAN registration, the Finance Minister has removed a purely procedural irritant that caused delays and technical defaults without adding any real compliance value. It simplifies life for genuine one-off homebuyers while leaving tax collection intact, which is exactly how tax administration should work.
Preconstruction interest cap
From April 1, 2026, the treatment of pre-construction interest on home loans for self-occupied properties changes under the New Income Tax Act, 2025. The deduction for interest paid during the building phase is now fully integrated into the overall ₹2 lakh annual interest deduction cap.
This pre-construction interest must be claimed in five equal annual instalments starting from the year of completion. Still, it can no longer be ‘stacked’ to push the total interest deduction in any single year beyond ₹2 lakh.
In effect, from 1 April 2026, borrowers lose the flexibility to bundle large pre-construction interest into a high-income year and must spread the benefit within the same annual ceiling that applies to regular home-loan interest.
Anagh Pal is a personal finance expert who writes on real estate, tax, insurance, mutual funds and other topics.
