Listen to this article in summarized format
The government has released the Draft Income-tax Rules, 2026, suggesting significant changes in rules related to financial transactions where PAN disclosure will be mandatory.
Income Tax Guide
Income Tax Union Budget FY 2026-27 LiveIncome Tax Slabs FY 2025-26Income Tax Calculator 2025
Under the suggested changes, limits of some transactions where the PAN card disclosure is necessary have been increased. Two of the suggested increased limits where PAN card disclosure is required are- from Rs 10 lakh to Rs 20 while purchasing or selling an immovable property, from Rs 50,000 per day to Rs 10 lakh or more in a financial year while depositing cash in a bank, cooperative bank or a post office. As per the draft suggestions, the RBI wants to make PAN disclosure mandatory if a person withdraws cash aggregating to Rs 10 lakh or more in a financial year in one or more accounts of a person.
After releasing the Draft Income-tax Rules, 2026, the government has asked for feedback from stakeholders. The last date to submit such a feedback is February 22, 2026. Post feedback, the revised draft will be approved and notified by the government, and will come into effect from April 1, 2026.
Here’s a closer look at 5 key PAN-related changes that could directly impact the common taxpayer from April 1, 2026. (Explained by Harsha Bhuta, partner at Bhuta Shah & Co. LLP)
1. Cash deposits
Earlier, cash deposits of more than Rs 50,000 in a single day in a bank/post office required PAN. It is proposed to increase the threshold of cash deposits up to Rs 10 lakh in a financial year across various bank accounts. Further, it also includes the same threshold for cash withdrawals (up to Rs 10 lakh in a financial year).
2. Purchase of motor vehicle
In the existing rule, all purchases of motor vehicles (excluding motorcycles) necessitated the quoting of PAN. However, it is proposed to apply the PAN requirement to the purchase of motor vehicles or motorcycles having a value more than Rs 5 lakh.
3. Hotel/restaurant bills
At present, PAN is mandatorily required for payments to hotels/restaurant bills exceeding Rs 50,000. However, this threshold limit is proposed to be increased to Rs 1 lakh.
4. Immovable property transactions
While the existing rules require quoting of PAN for transactions over Rs 10 lakh. It is proposed to increase the threshold limit to Rs 20 lakhs.
5. Insurance policy
The present rules prescribe the PAN requirement in a case where insurance premium exceeds Rs 50,000. However, the scope of this requirement is widened significantly to apply PAN requirement for any account-based relationship with insurance companies.
Why were draft Income-tax Rules, 2026 required?
Harsh Bhuta, partner at Bhuta Shah & Co. LLP, says, “The Draft Income Tax Rules 2026 (New Rules) are placed in the public domain to seek feedback / comments from various stakeholders. These new rules are designed to simplify the language, provide for formulae and tables, eliminate the redundancy that existed in the Income Tax Rules, 1962. While a major part of the existing Income Tax Rules 1962 has been preserved in the New Rules, certain changes are introduced to align with the changes in the Income Tax Act 2025.”
Chartered accountant Kunal Pasari says, “It is pertinent for the Income Tax department to keep a vigil on the transactions entered by individuals and other entities to keep a track of their Income tax payments and to ensure that there is no tax avoidance. As a result, the Income Tax Department requires individuals to make a disclosure when they enter large-value transactions. Once these transactions come to the knowledge of the Income Tax Department, they keep a watch on the individual to ensure that he/she does not default in making income tax payments.”
Major PAN card-related suggestions in draft Income-ax Rules, 2026 that could impact the common man
- Existing provisions under Rule 114B linked to Income tax act 1961Proposed provisions under Rule 159 linked to Income tax act 2025Deposits with a banking company or a cooperative bank or with post officeCash deposits exceeding Rs50,000 in one day needed to be reportedCash deposits aggregating to Rs10 lakhs or more in a financial year in one or more account of a person be reportedWithdrawal with a banking company or a cooperative bank or with post officeNo such disclosure requiredCash withdrawals aggregating to Rs10 lakhs or more in a financial year in one or more account of a person be reportedVehicle purchasePurchase/sale of a motor vehicle (including two wheelers) irrespective of the amount involved needed a disclosurePurchase/sale of a motor vehicle (including two wheelers) for values exceeding Rs5 lakhs needs to be disclosedPayment to Hotels/Restaurants or towards event paymentsCash payments exceeding Rs50000Cash payments exceeding Rs50000Purchase/sale of immovable propertyAmount exceeding Rs10 lakhsAmount exceeding Rs20 lakhs
aniltikotekar4sme.com 