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The government has proposed significant changes to the rules governing when quoting a PAN is mandatory for routine financial transactions
PAN Card
Draft Income Tax Rules 2026: The government has proposed significant changes to the rules governing when quoting a Permanent Account Number (PAN) is mandatory for routine financial transactions. Under the draft Income Tax Rules, 2026, several monetary thresholds have been revised upward, potentially easing compliance for smaller transactions while maintaining stricter oversight for high-value dealings.
The draft rules, currently open for public feedback, are aligned with the forthcoming Income Tax Act, 2025, which is scheduled to take effect next year.
Higher Limits For Cash Deposits And Withdrawals
A major proposal relates to cash deposits and withdrawals. Under the draft norms, PAN will be required only if a person deposits or withdraws Rs 10 lakh or more in a financial year across one or multiple bank accounts.
This marks a significant departure from the current rule, which mandates quoting PAN for cash deposits exceeding Rs 50,000 in a single day with a bank or cooperative bank. The proposed move shifts compliance from daily reporting to annual aggregate transactions, potentially reducing paperwork for regular banking activity.
Vehicle Purchases: Threshold-Based Compliance
The draft rules also revise PAN requirements for purchasing vehicles. Buyers will need to quote PAN only if the value of a motor vehicle — including two-wheelers — exceeds Rs 5 lakh.
Currently, PAN is compulsory for buying any motor vehicle, irrespective of price, with no clear distinction for two-wheelers. The proposed threshold aims to rationalise compliance based on transaction value and offer relief to buyers of lower-priced vehicles.
Higher Cap for Hospitality and Event Payments
If approved, PAN will be mandatory only when payments to hotels, restaurants, banquet halls, convention centres or event managers exceed Rs 1 lakh.
At present, customers must provide PAN for hotel or restaurant bills above Rs 50,000. Doubling the threshold could ease documentation requirements for moderate spending in the hospitality and events sector.
Real Estate Transactions: Updated Limits
For property deals, the draft rules propose raising the PAN requirement threshold from ₹10 lakh to Rs 20 lakh for transactions involving the purchase, sale, gift or joint development of immovable property. The revision reflects rising property values and seeks to modernise outdated limits.
Insurance Accounts to Come Under PAN Net
The draft also introduces a fresh compliance requirement for the insurance sector. PAN will become mandatory for initiating an account-based relationship with an insurer.
Under current provisions, PAN is required only when annual life insurance premiums exceed ₹50,000. The new proposal broadens reporting obligations at the account-opening stage itself.
Other Key Proposals in the Draft
Beyond PAN-related revisions, the draft rules include several additional measures. These include higher value thresholds for employer-provided perquisites, mandatory reporting of crypto transactions by exchanges to the Income Tax Department, and formal recognition of Central Bank Digital Currency (CBDC) as a valid electronic payment method.
The Central Board of Direct Taxes (CBDT) released the draft rules and related forms for public consultation following the Budget 2026 announcement by Finance Minister Nirmala Sitharaman. Final rules are expected to be notified by early March after stakeholder consultations.
Implementation Timeline
The new Income Tax Act, 2025, along with the updated rules, is set to come into force from April 1, 2026. Until then, taxpayers and businesses can review the draft framework and submit feedback.
If implemented in their current form, the revised PAN thresholds could simplify compliance for routine transactions while ensuring continued scrutiny of high-value financial activity.
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February 11, 2026, 08:09 IST
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