New Delhi: The government has unveiled the Draft Income Tax Rules, 2026, proposing significant changes to Permanent Account Number (PAN) requirements. Linked to the upcoming Income Tax Act, 2025, these revisions aim to simplify compliance for everyday transactions while tightening monitoring on high-value financial activities.
The new rules are expected to come into effect from April 1, 2026. Here is a breakdown of the key proposals and how they impact the common man.
1. Relief on Cash Deposits and Withdrawals
One of the most major reliefs comes for banking transactions. Currently, quoting PAN is mandatory for cash deposits exceeding ₹50,000 in a single day.
- Proposed Change: Under the new rules, PAN will only be mandatory if the aggregate cash deposit or withdrawal across all bank accounts exceeds ₹10 lakh in a financial year. This shift from a daily limit to an annual aggregate is expected to significantly reduce the paperwork for routine banking.
2. Higher Threshold for Vehicle Purchases
Currently, providing a PAN card is mandatory for the purchase of any motor vehicle, regardless of its price.
- Proposed Change: The draft rules propose that PAN will only be required if the price of the motor vehicle (including two-wheelers) exceeds ₹5 lakh. This aligns the documentation requirement with the actual value of the asset.
3. Easing Hospitality and Event Payments
For payments made to hotels, restaurants, banquet halls, or event managers, the current PAN requirement kicks in for bills exceeding ₹50,000.
- Proposed Change: The threshold is proposed to be doubled to ₹1 lakh. This is seen as a move to ease compliance for moderate family or business expenses in the hospitality sector.
4. Real Estate Transactions
Reflecting the rise in property prices, the government has proposed increasing the transaction limit for quoting PAN in property deals.
- Proposed Change: The limit for purchase, sale, gift, or joint development of immovable property is set to increase from ₹10 lakh to ₹20 lakh.
5. Stricter Norms for Insurance
While many sectors see relaxed limits, the insurance sector will see tighter norms.
- Proposed Change: A new provision will mandate PAN for establishing any account-based relationship with an insurance company. Currently, PAN is only required if life insurance premiums exceed ₹50,000 in a financial year.
Other Key Updates
- Crypto Reporting: Mandatory reporting of transactions by cryptocurrency exchanges.
- Digital Currency: Recognition of Central Bank Digital Currency (CBDC) as a valid electronic payment mode.
The Central Board of Direct Taxes (CBDT) has released these draft rules for public feedback following the Budget 2026 announcement. Final rules are expected to be notified by early March 2026.
