The Government of India has proposed several important changes related to Permanent Account Number (PAN) quoting requirements in the Draft Income-tax Rules, 2026. These rules are designed to simplify compliance, track high-value transactions more effectively, and reduce unnecessary documentation for smaller transactions.
The new rules are expected to replace the Income-tax Rules, 1962 and may come into force from 1 April 2026 along with the Income-tax Act, 2025, after final approval by the government.
Below is a complete explanation of all major PAN rule changes, including limits, references, and practical examples.
1. PAN Requirement for Cash Deposits & Withdrawals
Proposed Rule
Under the Draft Income-tax Rules, 2026, PAN must be quoted when:
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Cash deposits or withdrawals reach ₹10 lakh or more in a financial year across one or more bank accounts.
Earlier rule:
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PAN required when cash deposit exceeded ₹50,000 in a single day.
Reference
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Draft Income-tax Rules, 2026 (proposed Rule relating to high-value cash transactions)
Example
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Mr. A deposits ₹3 lakh + ₹4 lakh + ₹3 lakh in the same financial year.
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Total deposits = ₹10 lakh
➡ PAN will be mandatory because the aggregate annual limit crossed ₹10 lakh.
2. PAN Requirement for Motor Vehicle Purchases
Proposed Rule
PAN will be required only if the vehicle value exceeds ₹5 lakh, including motorcycles.
Earlier rule:
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PAN was mandatory for all motor vehicle purchases except two-wheelers.
Reference
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Draft Income-tax Rules, 2026 – PAN quoting for vehicle transactions
Example
| Vehicle Price | PAN Required |
|---|---|
| ₹3,50,000 bike | No |
| ₹4,80,000 car | No |
| ₹7,50,000 car | Yes |
➡ PAN required only for vehicles above ₹5 lakh.
3. PAN Requirement for Property Transactions
Proposed Rule
PAN must be quoted when property transaction value exceeds ₹20 lakh.
Earlier rule:
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PAN required when property value exceeded ₹10 lakh.
This rule also applies to:
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Purchase or sale of property
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Gift of property
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Joint Development Agreements (JDA)
Example
| Property Value | PAN Required |
|---|---|
| ₹18 lakh flat | No |
| ₹25 lakh plot | Yes |
➡ PAN mandatory only when transaction exceeds ₹20 lakh.
4. PAN Requirement for Hotel, Restaurant & Event Payments
Proposed Rule
PAN required when payments exceed ₹1 lakh.
Earlier rule:
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PAN required for payments above ₹50,000.
Applicable for:
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Hotel bills
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Restaurant payments
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Banquet halls
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Event management services
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Convention centres
Example
| Payment Amount | PAN Required |
|---|---|
| ₹60,000 hotel bill | No |
| ₹1,20,000 banquet payment | Yes |
5. PAN Mandatory for Insurance Accounts
Proposed Rule
PAN will be required to start any account-based relationship with an insurance company.
Earlier rule:
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PAN required only when life insurance premium exceeded ₹50,000 per year.
Example
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Buying insurance policy with ₹30,000 premium
➡ PAN required because account relationship is created.
Comparison Table: Old vs New PAN Limits
| Transaction Type | Current Limit | Draft Rules 2026 |
|---|---|---|
| Cash Deposit | ₹50,000 per day | ₹10 lakh per year |
| Cash Withdrawal | ₹20 lakh reporting | ₹10 lakh per year |
| Property Transactions | ₹10 lakh | ₹20 lakh |
| Motor Vehicle Purchase | All vehicles except bikes | Above ₹5 lakh |
| Hotel / Restaurant Payments | ₹50,000 | ₹1 lakh |
| Insurance | Premium above ₹50,000 | PAN required at account opening |
Objective of the New PAN Rules
The proposed rules aim to:
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Track high-value financial transactions
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Prevent tax evasion and black money
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Reduce compliance burden for small transactions
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Improve financial transparency
The government plans to monitor large transactions more efficiently while allowing smaller everyday transactions without unnecessary documentation.
When Will These Rules Apply?
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Draft rules released for public consultation
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Expected notification after review
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Likely effective from 1 April 2026 (FY 2026-27).
Important Disclaimer (For Blog)
Disclaimer:
This article is for informational purposes only. The rules discussed are based on the Draft Income-tax Rules, 2026 released by the Government of India. The final provisions may change after public consultation and official notification. Readers should refer to official notifications issued by the Income-tax Department or consult a tax professional before making financial decisions.