The Central government last week released a document on the draft Income Tax Rules. In the document, the Centre proposed several key changes in the new Income Tax Rules, 2026, which will be implemented under the Income Tax Act 2025, effective from 1 April. Among the proposed changes, the government is planning to significantly hike the monetary thresholds for quoting a Permanent Account Number (PAN) while purchasing motor vehicles, cash withdrawals or deposits from a bank, purchasing of property, and settling of hotel bills.
The draft further proposes raising the value of perquisites provided by employers, and making it compulsory for crypto exchanges to share information with the income tax department. It also includes Central Bank Digital Currency (CBDC) as an accepted mode of electronic payment.
Days after Finance Minister Nirmala Sitharaman’s Budget 2026 announcement, the Central Board of Direct Taxes (CBDT) has released draft rules and forms for public comments pertaining to the new Income Tax Act, 2025.
Rules changed for quoting PAN under draft income tax rules
The new income tax rules specify where it will be mandatory to quote PAN.
According to the proposed Income Tax Rule, 2026, quoting PAN will be mandatory for making cash deposits or withdrawals aggregating to ₹10 lakh or more in a financial year, in one or more accounts of a person.
At present, it is compulsory to quote PAN for cash deposits that exceed ₹50,000 on any one day with a banking company or a cooperative bank.
Similarly, the monetary threshold to quote PAN while buying a motor vehicle has also been changed. Buyers purchasing motor vehicles, including motorcycles, had to quote their PAN if the price exceeded ₹5 lakh. Under the present rules, there is no provision for quoting of PAN for the purchase of two-wheelers. For motor vehicles, quoting of PAN is mandatory regardless of price.
The requirement of PAN will also affect the hospitality sector. For hotel or restaurant bills, payments made to convention centres or banquet halls, or to a person engaged in event management, PAN will be mandatory if the payment exceeds ₹1 lakh. The current I-T Rules specify a ₹50,000 threshold for quoting PAN on hotel or restaurant bills.
At present, the limit for the purchase, sale, gift or joint development agreement of any immovable property is set at ₹10 lakh. This threshold has been increased to ₹20 lakh under the draft income tax rules.
Under the new income tax rules, PAN will be mandatory for starting an account-based relationship with an insurance company. Currently, payments aggregating to more than ₹50,000 in a financial year, including life insurance premiums, require a PAN.
When will New Income Tax Act, 2025, implemented?
The New Income Tax Act, 2025, is set to be implemented from 1 April 2026 after the New Income Tax Rules are finalised.
The CBDT will finalise the rules after stakeholder consultation and notify them by the first week of March, as per a PTI report, citing people in the Finance Ministry with knowledge of the matter.
