The government has given taxpayers, professionals, and industry stakeholders time until February 22, 2026, to submit their feedback on the draft rules.
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New Delhi: With an aim to reduce the compliance burden while focusing on high-value, tax-related transactions, the Modi government has proposed a slew of significant changes to the rules for the Permanent Account Number (PAN) cardholders. The authorities have also invited public feedback on the proposed rules till February 22, 2026.
The changes specifically focus on raising the threshold for quoting PAN in financial transactions such as the purchase or sale of motor vehicles, cash deposits and withdrawals in banks, and payments of hotel bills. The government is of the opinion that removing the mandatory PAN requirement for low-risk and low-value transactions can ease the compliance burden.
ALSO READ: From PAN to Pre-Filled ITRs: New Income Tax Law to bring major changes
Here are some of the key details:
- The proposed rules (Rule 159) list the financial transactions for which quoting PAN or applying for one will remain mandatory.
- PAN will no longer be required in specific cases.
- The government has given taxpayers, professionals, and industry stakeholders time until February 22, 2026, to submit their feedback on the draft rules.
- The main objective of this change is to reduce the compliance burden.
- Earlier, quoting PAN was mandatory even for low-value transactions.
- For example, purchasing an old vehicle or motorcycle worth less than ₹5 lakh, small cash deposits, or routine high-frequency payments required PAN.
- The aim of this change is to remove the requirement of PAN for low-risk, low-value transactions.
- By fixing a threshold, the government intends to focus on more significant transactions from a taxation perspective, thereby reducing unnecessary paperwork.
New Draft Income Tax Rules
As per the draft rule proposals, the draft rules have set a transaction value limit of Rs 5 lakh for all vehicles that require registration under the Motor Vehicles Act. It is important to note that if the transaction value exceeds Rs 5 lakh, PAN will be mandatory. If the transaction value is below ₹5 lakh, PAN will not be required.
When Will a PAN Card Be Mandatory?
- PAN will now be mandatory for total cash deposits or withdrawals of Rs 10 lakh or more in a financial year
- PAN is currently required for cash deposits exceeding Rs 50,000 on any single day in a banking company or cooperative bank.
- PAN will be required for payments exceeding Rs 1 lakh in the case of bills from hotels, restaurants, convention centres, or banquet halls
- Currently, the threshold for quoting PAN in such cases is Rs 50,000.
- For the purchase, sale, gift of any immovable property, or in the case of a joint development agreement, PAN will be required if the transaction value exceeds Rs 20 lakh
- Currently, the existing limit is Rs 10 lakh.
PAN will now be mandatory to initiate an account-based relationship with an insurance company. Currently, PAN is required if life insurance premium payments exceed ₹50,000 in a financial year.
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