Govt proposes key PAN rule changes in draft income tax rules

Under the draft Income Tax Rules, 2026, the government has proposed key changes to when a Permanent Account Number (PAN) must be quoted for everyday financial transactions. Several monetary limits have been raised, which could ease compliance for small transactions while tightening reporting for larger ones. The draft rules are for the time being released for public feedback, and are linked to the upcoming Income Tax Act, 2025. The new rules will take effect next year.

One of the biggest changes relates to cash dealings with banks. Under the draft rules, quoting PAN will be compulsory only when a person deposits or withdraws cash of Rs 10 lakh or more in a financial year across one or more bank accounts.

The draft rules also revise PAN requirements for vehicle purchases. Buyers will have to quote PAN only if the price of a motor vehicle, including a motorcycle, exceeds Rs 5 lakh.

Again, the hospitality and events sector will also see a change if the draft rules are approved. PAN will be required only when payments to hotels, restaurants, banquet halls, convention centres or event managers exceed Rs 1 lakh.

For property transactions, the draft rules propose raising the PAN threshold from Rs 10 lakh to Rs 20 lakh for the purchase, sale, gift or joint development of immovable property. This revision reflects rising property values and aims to update older limits.