New Delhi: The Central Board of Direct Taxes has proposed significantly higher transaction limits for quoting Permanent Account Number (PAN) in daily financial activities, bringing relief to millions of taxpayers who will no longer need to furnish PAN for smaller transactions.
The Draft Income Tax Rules 2026, released for public consultation, raise PAN thoting thresholds across five major transaction categories, marking the most substantial revision in PAN requirements in over a decade. The changes will take effect from April 1, 2026, alongside the new Income Tax Act 2025.
KEY HIGHLIGHTS
- ₹10 lakh annual limit for cash transactions requiring PAN
- ₹5 lakh threshold for vehicle purchases
- ₹20 lakh limit for property transactions
- Final rules to be notified by first week of March 2026
- Implementation from April 1, 2026
Five key PAN threshold changes
1. Cash deposits and withdrawals: ₹10 lakh annual limit
PAN will now be mandatory only for cash deposits or withdrawals aggregating to ₹10 lakh or more in a financial year across one or more accounts of a person.
Under the current Income Tax Rules 1962, banks require PAN for cash deposits exceeding ₹50,000 in a single day. The 20-fold increase in threshold is designed to reduce compliance burden for routine banking transactions.
2. Motor vehicle purchases: ₹5 lakh threshold introduced
Buyers will need to quote PAN only if the vehicle price exceeds ₹5 lakh. This applies to both cars and motorcycles.
The existing rules mandate PAN for all motor vehicle purchases regardless of price, while two-wheelers had no PAN requirement. The new uniform threshold covers all vehicle categories.
3. Property transactions: Threshold doubled to ₹20 lakh
PAN will be required for purchase, sale, gift, or joint development agreements involving immovable property only if the transaction value exceeds ₹20 lakh.
The current threshold stands at ₹10 lakh. Real estate transactions below ₹20 lakh will no longer require PAN disclosure.
4. Hotel and event bills: ₹1 lakh limit
Payment to hotels, restaurants, and event organizers will require PAN only if the bill amount exceeds ₹1 lakh in a single transaction.
The existing limit of ₹50,000 has been doubled, easing compliance for mid-range hospitality spending.
5. Insurance: Account-based relationship requirement
PAN will become mandatory for opening any account-based relationship with an insurance company, regardless of premium amount.
Currently, PAN is required only when life insurance premium payments exceed ₹50,000 in a financial year. The new rule broadens the PAN requirement to the account opening stage itself.
Additional changes in draft rules
The draft rules expand the list of Category 1 metropolitan cities for House Rent Allowance claims. Bengaluru, Pune, Ahmedabad, and Hyderabad have been added to the existing metros of Delhi, Mumbai, Kolkata, and Chennai.
Tax-free perquisite values have been updated. Free food and non-alcoholic beverages provided by employers will be valued at ₹200 per meal. For official motor cars, the monthly perquisite will be ₹8,000 for vehicles with engine capacity below 1.6 litres and ₹10,000 for larger vehicles.
The draft introduces detailed reporting obligations for crypto-asset service providers, making it mandatory for crypto exchanges to share information with the Income Tax Department. Central Bank Digital Currency has been included as an accepted mode of electronic payment.
Timeline and stakeholder consultation
Finance Ministry sources confirmed the CBDT will finalize the rules after stakeholder consultations and notify them by the first week of March 2026.
The Income Tax Department has set up a utility on its e-filing portal to collect public feedback. The consultation window remains open until the final notification.
The rules are being drafted to operationalize the Income Tax Act 2025, which replaces six-decade-old legislation and comes into force on April 1, 2026. The new framework reduces the number of rules from 511 to 333 and tax forms from 399 to 190.
According to official sources, the intent behind raising PAN thresholds is to capture only relevant high-value information while using technology-enabled reporting mechanisms under the new Income Tax Act.
Frequently Asked Questions
No. PAN is required only if your total cash deposits or withdrawals across all accounts reach ₹10 lakh or more in the financial year.
Yes. The new rule applies uniformly to all motor vehicles including motorcycles, unlike current rules which exempt two-wheelers.
The revised PAN rules will be implemented from April 1, 2026, subject to final notification by CBDT in early March.
Yes. Under the draft rules, PAN will be mandatory when starting any account-based relationship with an insurance company, regardless of premium amount.
Yes. The Income Tax Department has invited public comments through its e-filing portal utility. Stakeholders can submit inputs until the final notification.
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Disclaimer: This article is for informational purposes only. Readers are advised to consult qualified tax professionals for specific guidance on their tax obligations and compliance requirements.
