The Central Board of Direct Taxes (CBDT) has released draft Income Tax Rules, 2026 — data-aligned with the upcoming Income‑tax Act, 2025 — proposing major simplifications in PAN‑quoting requirements for high‑value transactions. One of the most talked‑about changes: PAN will be mandatory only for cash transactions aggregating ₹10 lakh or more in a financial year. These draft rules are open for public comments before finalisation.

🔎 1. PAN Requirement for Cash Transactions: What’s New?

Under the draft Income‑tax Rules, 2026, quoting your Permanent Account Number (PAN) — the key identity for tax tracking — will become less frequent for many routine transactions:

✅ Cash deposits & withdrawals:

• PAN will be mandatory only if your total cash deposits or withdrawals reach ₹10 lakh or more in a financial year, across one or more bank accounts.
• This replaces the current requirement where PAN had to be quoted for cash deposits exceeding ₹50,000 in a single day at a bank or cooperative bank.

This change makes compliance simpler for small or medium‑level cash transactions while still keeping large money flows traceable.

🏦 2. Why the Change Matters

The shift reflects a move toward less paperwork and greater ease for taxpayers, while still allowing the tax department to track significant cash movements. Previously:

• Even small cash deposits required PAN if they exceeded ₹50,000 in a day.
• Frequent PAN quoting for everyday receipts was a compliance burden.

Now, PAN matters only at higher aggregate thresholds, reducing unnecessary reporting for casual taxpayers.

💡 3. Other Key PAN Threshold Changes in the Draft Rules

The cash transaction change is part of broader rationalisation — increasing thresholds elsewhere too:

🔹 Motor vehicle purchases:
PAN required only if the vehicle’s price exceeds ₹5 lakh — a shift from the older rule where PAN was needed for all four‑wheelers regardless of price and not required for two‑wheelers.

🔹 Hotel, restaurant, and event payments:
PAN will be needed only for payments above ₹1 lakh (up from ₹50,000).

🔹 Property transactions:
PAN mandatory if transaction value exceeds ₹20 lakh, instead of the current ₹10 lakh limit.

🔹 Insurance accounts:
PAN will be required for starting an account‑based relationship with an insurer (a new addition).

These changes aim to keep PAN compliance focused on material financial moves rather than everyday spending.

🧩 4. When Will These Rules Come Into Effect?

• The draft rules are expected to be notified by the first week of march 2026 after stakeholder consultation.
• They will take effect from April 1, 2026, alongside the Income‑tax Act, 2025 — replacing the Income Tax Rules of 1962.

📈 5. What This Means for You (Taxpayer Takeaways)

✔ Simpler compliance:

Less frequent PAN quoting means fewer forms and less paperwork for routine financial activities like small deposits or bills.

✔ Focused tracking:

Significant cash movements — ₹10 lakh or more in a year — still require PAN, helping tax authorities monitor large cash flows.

✔ Ease for small transactions:

Daily cash deposits or withdrawals under the new annual ₹10 lakh threshold won’t need PAN quoting at every step.
This is especially helpful for small businesses, freelancers, and salaried individuals who may use cash occasionally.

📌 Summary

The draft Income Tax Rules, 2026 propose a major ease in PAN compliance by requiring PAN only for cash transactions (deposits or withdrawals) totaling ₹10 lakh or more in a financial year. This update — part of a series of higher thresholds for PAN quoting — is meant to make compliance simpler for most taxpayers while preserving data collection for material financial moves.

 

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