The government’s proposed Income Tax Rules 2026 could bring significant changes to how Permanent Account Number (PAN) details are required in financial transactions. The draft provisions aim to simplify compliance for routine, small-value dealings while tightening oversight on high-value transactions. If implemented, these rules would affect cash deposits, vehicle purchases, property deals, and large hospitality or event payments.

Objective Behind the Proposed Changes

The primary goal of the draft rules is to reduce inconvenience for individuals in everyday transactions while strengthening monitoring of high-value financial activity. Authorities intend to strike a balance between ease of doing financial activities and maintaining transparency in large monetary dealings. By increasing reporting thresholds, the government seeks to ensure that only substantial transactions require PAN disclosure.

Revised Rules for Cash Deposits and Withdrawals

Under the proposed framework, PAN would be required only when the total cash deposits or withdrawals across one or more bank accounts exceed ₹10 lakh in a financial year. This represents a substantial shift from the current rule, which mandates PAN submission for cash transactions above ₹50,000 in a single day.

If the draft rules are approved, individuals making smaller or routine cash transactions would no longer need to provide PAN repeatedly. This change is expected to reduce paperwork and make banking procedures smoother for ordinary account holders.

PAN Requirement for Vehicle Purchases

Another major proposal concerns motor vehicle purchases. At present, PAN is required for buying most vehicles except certain two-wheelers, regardless of price. Under the new draft, PAN would be mandatory only if the vehicle’s cost exceeds ₹5 lakh.

This revision would ease compliance for buyers of budget cars or two-wheelers priced below the threshold, while still ensuring that higher-value purchases remain traceable for tax purposes.

Higher Threshold for Hotel and Event Payments

The draft rules also propose increasing the PAN requirement limit for payments made to hotels, restaurants, banquet halls, convention centers, or event management companies. The new threshold is set at ₹1 lakh, compared to the current ₹50,000 limit.

This means individuals hosting small functions or making moderate hospitality payments may no longer need to submit PAN details, while large expenditures will continue to be monitored.

Property Transaction Limits May Double

Real estate transactions are another area where significant revisions have been suggested. The proposal states that PAN would be mandatory only when the value of a property transaction—such as purchase, sale, gift, or joint development agreement—exceeds ₹20 lakh.

Currently, the requirement applies when the transaction value crosses ₹10 lakh. Doubling the threshold could make property dealings simpler for buyers and sellers involved in smaller-value transactions, while maintaining scrutiny for high-value real estate deals.

What These Changes Could Mean for Taxpayers

If the draft Income Tax Rules 2026 come into force, taxpayers may experience fewer compliance hassles in day-to-day financial activities. Routine transactions would involve less documentation, saving time and effort. At the same time, larger transactions would remain under regulatory observation, helping authorities track significant financial flows and prevent tax evasion.

Experts believe such reforms could modernize financial reporting requirements and align them with current economic realities, where transaction sizes have increased over time due to inflation and rising asset values.

Conclusion

The proposed PAN rule revisions signal a shift toward a more practical and streamlined compliance system. By raising thresholds for PAN submission, the government aims to reduce unnecessary formalities for small transactions while maintaining strict monitoring of major financial activities. If implemented, these changes could make financial processes more convenient for individuals while preserving transparency in high-value dealings.