Draft Income-tax Rules 2026: PAN Quoting Limits May Rise Sharply Across Transactions

The draft Income-tax Rules 2026 have proposed major changes to the transaction limits where quoting a Permanent Account Number (PAN) will be mandatory. If implemented, these changes could reduce PAN quoting for smaller transactions, while expanding tracking for certain financial relationships.

The revised rules are being framed to support the Income Tax Act, 2025, which is scheduled to come into effect from April 1. The Central Board of Direct Taxes (CBDT) is expected to finalise the rules after stakeholder consultations and notify them by the first week of March.

Higher Limit Proposed For Cash Deposits And Withdrawals

One of the biggest changes is for cash transactions in banks. Under the draft rules, PAN would be mandatory for cash deposits or withdrawals aggregating to ₹10 lakh or more in a financial year across one or more bank accounts.

Currently, PAN is required for cash deposits above ₹50,000 in a single day. The draft proposal is a major threshold increase and also includes withdrawals, not just deposits.

PAN Requirement For Motor Vehicle Purchases

The draft rules also propose a threshold-based approach for motor vehicle purchases. PAN would be required only if the purchase price exceeds ₹5 lakh. This would include two-wheelers as well.

At present, PAN is mandatory for all motor vehicle purchases, although two-wheelers are excluded.

Hotel, Restaurant And Event Payments May Get Relief

For payments made at hotels, restaurants, convention centres, banquet halls, or event management service providers, the draft rules propose a higher threshold.

PAN would be required only if the payment exceeds ₹1 lakh, compared with the current limit of ₹50,000.

Property Transactions: Threshold Proposed To Double

For immovable property transactions such as purchase, sale, gift, or joint development agreements, the draft rules propose that PAN will be mandatory only if the transaction value exceeds ₹20 lakh.

This is up from the current threshold of ₹10 lakh.

Insurance: Scope Proposed To Expand

A key change is proposed for insurance. PAN may become mandatory for initiating any account-based relationship with an insurance company.

Currently, PAN is required only when life insurance premiums exceed ₹50,000 in a financial year.

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Conclusion

The draft Income-tax Rules 2026 suggest a broad shift towards higher PAN quoting thresholds for large transactions, while also expanding PAN requirements for insurance relationships. If notified, the changes could reduce compliance for smaller payments but strengthen tracking for higher-value activities. Taxpayers and consumers should keep an eye on the final notification, as the rules may still change after consultations.

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