New Delhi, February 12: The government has proposed major changes to Permanent Account Number (PAN) requirements under the draft Income Tax Rules, 2026, linked to the upcoming Income Tax Act, 2025. The revised norms aim to simplify compliance for small and routine transactions while tightening oversight on high-value financial activity. The new law is set to come into effect from April 1, 2026.

Higher INR Limit for Cash Deposits and Withdrawals

One of the most significant changes relates to banking transactions. Under the draft rules, PAN will be mandatory only when a person deposits or withdraws cash of INR 10 lakh or more in a financial year across one or more bank accounts.

Currently, PAN must be quoted for cash deposits exceeding INR 50,000 in a single day with a bank or cooperative bank. The proposed shift from a daily to an annual aggregate limit could reduce compliance burden for regular banking activities. Budget 2026 FAQs: From Income Tax Slabs Under New Tax Regime To Transition to ‘Income Tax Act 2025’, All Your Questions Answered Here.

PAN Rule Updated for Buying Vehicles

The draft rules also revise PAN requirements for motor vehicle purchases. Buyers will need to quote PAN only if the vehicle’s price, including motorcycles, exceeds INR 5 lakh.

At present, PAN is mandatory for purchasing motor vehicles regardless of price. The new threshold aligns documentation requirements with the value of the transaction.

Relief for Hotel and Event Payments

For payments to hotels, restaurants, banquet halls, convention centres or event managers, PAN will be required only if the amount exceeds INR 1 lakh.

Currently, PAN must be quoted for bills above INR 50,000. Doubling the limit could ease compliance for moderate hospitality expenses. Why Income Tax Refunds Are Delayed and What To Do If Your ITR Is Still Pending.

PAN Norms for Real Estate Transactions

In property deals, the PAN threshold is proposed to be increased from INR 10 lakh to INR 20 lakh for purchase, sale, gift or joint development of immovable property. The revision reflects rising real estate prices and updates older compliance limits.

Stricter PAN Rules for Insurance Sector

A new provision mandates PAN for starting an account-based relationship with an insurance company. At present, PAN is required only when life insurance premiums exceed INR 50,000 in a financial year.

Other Key Proposals

Beyond PAN-related changes, the draft rules propose higher limits for employer-provided perquisites, mandatory transaction reporting by crypto exchanges, and recognition of Central Bank Digital Currency (CBDC) as a valid electronic payment method.

The Central Board of Direct Taxes (CBDT) has released the draft rules for public feedback following the Budget 2026 announcement by Finance Minister Nirmala Sitharaman. Final rules are expected to be notified by early March 2026.

If implemented, the revised PAN thresholds could simplify routine financial transactions while maintaining strict monitoring of high-value dealings.

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(The above story first appeared on LatestLY on Feb 12, 2026 03:23 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).