Income Tax Rules 2026: New PAN Limits for Cash Transactions, Property, and Hotels
The Central Board of Direct Taxes ( CBDT ) has released the Draft Income Tax Rules , 2026, inviting public comments until February 22, 2026. These proposed rules are set to replace the decades-old Income-tax Rules, 1962, and aim to simplify compliance for routine financial transactions while tightening monitoring of high-value dealings. The changes are designed to reduce paperwork for ordinary taxpayers while ensuring transparency for significant transactions.
Here’s a detailed look at the key PAN-related changes that could impact you:
1. Cash Deposits and Withdrawals
Under the draft rules, PAN will be mandatory for aggregate annual cash deposits or withdrawals of Rs 10 lakh or more across all bank accounts. Currently, PAN is required only for deposits exceeding Rs 50,000 in a single day, with no specific rules for withdrawals. The revised threshold significantly eases documentation for smaller transactions, allowing taxpayers to manage day-to-day banking with less hassle.
2. Motor Vehicle Purchases
The draft rules revise PAN requirements for vehicle purchases, excluding lower-priced vehicles. Currently, all motor vehicles above Rs 5 lakh, including motorcycles, require PAN. The new rules aim to rationalise compliance, providing relief for buyers of moderately priced cars while maintaining oversight for high-value vehicles.
3. Hotel, Restaurant, and Event Payments
For hospitality and events, PAN will be mandatory for payments exceeding Rs 1 lakh to hotels, restaurants, banquet halls, convention centres, or event managers. The current threshold of Rs 50,000 often created inconvenience for moderate spenders. The proposed change reduces paperwork for mid-range transactions while ensuring transparency for premium services.
4. Immovable Property Transactions
The PAN threshold for property deals, gifts, and joint development agreements (JDAs) is proposed to increase from Rs 10 lakh to Rs 20 lakh. This revision simplifies compliance for mid-value property buyers and developers, reducing unnecessary paperwork while keeping high-value transactions under tax scrutiny.
5. Insurance Premium Payments
The draft introduces new compliance for the insurance sector. PAN will now be required for all insurance payments exceeding Rs 50,000 per fiscal year. Currently, it applies only to life insurance premiums above this amount. This move aims to standardize PAN use across insurance-related financial activities.
Other Key Measures in the Draft Rules
The draft rules were released following the Budget 2026 announcement by Finance Minister Nirmala Sitharaman. After stakeholder consultations, the final rules are expected in early March 2026, with enforcement beginning April 1, 2026, alongside the Income Tax Act, 2025.
These updates aim to streamline compliance, reduce minor hassles for taxpayers, and focus on high-value transactions, making financial processes smoother and more transparent. Whether it’s banking, property, insurance, or hospitality, knowing these changes helps you stay ahead and avoid unnecessary PAN-related documentation.
Disclaimer: This article is for informational purposes only and does not constitute legal or financial advice. Readers should consult a qualified tax professional or the official Income Tax Department resources before making any financial decisions or compliance-related actions. The rules discussed are based on the draft Income Tax Rules, 2026 and are subject to change after public consultation and final notification.
Here’s a detailed look at the key PAN-related changes that could impact you:
1. Cash Deposits and Withdrawals
Under the draft rules, PAN will be mandatory for aggregate annual cash deposits or withdrawals of Rs 10 lakh or more across all bank accounts. Currently, PAN is required only for deposits exceeding Rs 50,000 in a single day, with no specific rules for withdrawals. The revised threshold significantly eases documentation for smaller transactions, allowing taxpayers to manage day-to-day banking with less hassle. 2. Motor Vehicle Purchases
The draft rules revise PAN requirements for vehicle purchases, excluding lower-priced vehicles. Currently, all motor vehicles above Rs 5 lakh, including motorcycles, require PAN. The new rules aim to rationalise compliance, providing relief for buyers of moderately priced cars while maintaining oversight for high-value vehicles.3. Hotel, Restaurant, and Event Payments
For hospitality and events, PAN will be mandatory for payments exceeding Rs 1 lakh to hotels, restaurants, banquet halls, convention centres, or event managers. The current threshold of Rs 50,000 often created inconvenience for moderate spenders. The proposed change reduces paperwork for mid-range transactions while ensuring transparency for premium services. 4. Immovable Property Transactions
The PAN threshold for property deals, gifts, and joint development agreements (JDAs) is proposed to increase from Rs 10 lakh to Rs 20 lakh. This revision simplifies compliance for mid-value property buyers and developers, reducing unnecessary paperwork while keeping high-value transactions under tax scrutiny.5. Insurance Premium Payments
The draft introduces new compliance for the insurance sector. PAN will now be required for all insurance payments exceeding Rs 50,000 per fiscal year. Currently, it applies only to life insurance premiums above this amount. This move aims to standardize PAN use across insurance-related financial activities. Other Key Measures in the Draft Rules
- Mandatory reporting of cryptocurrency transactions by exchanges.
- Higher thresholds for employer-provided perquisites.
- Formal recognition of Central Bank Digital Currency (CBDC) as a valid mode of electronic payment.
The draft rules were released following the Budget 2026 announcement by Finance Minister Nirmala Sitharaman. After stakeholder consultations, the final rules are expected in early March 2026, with enforcement beginning April 1, 2026, alongside the Income Tax Act, 2025.
These updates aim to streamline compliance, reduce minor hassles for taxpayers, and focus on high-value transactions, making financial processes smoother and more transparent. Whether it’s banking, property, insurance, or hospitality, knowing these changes helps you stay ahead and avoid unnecessary PAN-related documentation.
Disclaimer: This article is for informational purposes only and does not constitute legal or financial advice. Readers should consult a qualified tax professional or the official Income Tax Department resources before making any financial decisions or compliance-related actions. The rules discussed are based on the draft Income Tax Rules, 2026 and are subject to change after public consultation and final notification.
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