Budget 2026: Major Amendments to Income from House Property and PAN Requirements

In the budget 2026, Finance Minister Nirmala Sitharaman proposed an amendment of provisions concerning Income from House Property and Permanent Account Number (PAN).

An amendment is proposed in section 21(5) of the Income-tax Act, 2025, to align with the earlier Income-tax Act, 1961. With this change, the annual value of a property held as stock-in-trade will be considered as nil for up to two years from the end of the financial year in which the construction is officially completed, and a certificate of completion is issued by the authority.

Deductions on Income from House Property

Section 22 of the Act requires deductions for income from house property. Currently, section 22(2) limits the total deduction for a self-occupied property financed with borrowed capital to Rs. 2 lakh per year. However, this limit does not include interest from prior periods payable on borrowed capital for acquiring or constructing the property.

Section 22 of the Act is equivalent to Section 24 of the Income-tax Act, 1961, where the total deduction includes prior-period interest. This means taxpayers can now claim the interest deduction that accrued in earlier periods along with the current year’s interest, subject to the overall limit.

Quoting Permanent Account Number (PAN) in Documents

Section 262(10)(c) allows the Central Board of Direct Taxes (CBDT) to make rules specifying which business or professional documents must include a Permanent Account Number (PAN). However, this section only covers documents related to business or profession and does not give the CBDT the authority to require PAN in documents that are unrelated to business or profession.

It is proposed to change section 262(10)(c) so that the Central Board of Direct Taxes (CBDT) can create rules requiring people to mention their Permanent Account Number (PAN) in documents for certain transactions that are not related to business or profession.

These amendments will be effective from April 1, 2026.