PAN Rules Overhaul Ahead: New Income Tax Draft 2025 Brings Relief for Small Transactions
PAN Rules Overhaul Ahead: New Income Tax Draft 2025 Brings Relief for Small Transactions
The government has suggested key changes to rules concerning a Permanent Account Number (PAN) in the draft Income Tax Rules 2026. The government has proposed to increase several monetary limits where PAN is required, keeping the compliance process easier for small transactions, while high-value transactions will still be monitored strictly by tax authorities.
Presently, the draft income tax rules for 2026 are open for feedback and suggestions from stakeholders and the general public until February 22, 2026. These changes are being made to match the new Income Tax Act, 2025, which is expected to start from next year.
Here is a list of five such key changes introduced to the PAN rules:
1. Higher Limits For Cash Deposits And Withdrawals
In the Income Tax Rules 2026, the government has proposed a key change concerning the cash deposit and withdrawal limits. As per the change, now PAN will only be required in case deposits or withdrawals are Rs. 10 lakh or more in a financial year across one or multiple bank accounts.
This is a major shift from the current rule, where a PAN number was mandatory in case cash deposits exceed Rs 50,000 in a single day with a bank or cooperative bank. Under the new proposal, instead of checking deposits every day, authorities will look at your total transactions for the whole year. This may make things easier and reduce paperwork for people who use banks regularly.
2. PAN Requirement for Purchasing Vehicle
Proposals have also been raised in the draft income tax rules of 2025 regarding the PAN requirement in purchasing vehicles. Now, PAN will be required if the market value of the purchased motor vehicle, including two-wheelers, exceeds Rs. 5 lakh. Presently, PAN is a compulsory requirement when buying any motor vehicle irrespective of its price, with no clear distinction for two-wheelers. The aim of this proposal is to provide relief to the buyers of lower-priced vehicles.
3. Higher Cap for Hospitality and Event Payments
At present, customers having hotel or restaurant bills exceeding Rs 50,000 are required to provide PAN. This limit has been proposed to increase to an amount exceeding Rs. 1 lakh under the Income Tax Rules 2025.
4. Revised Limits on Real Estate Transactions
The draft rules suggest increasing the requirement to provide a PAN card for property transactions from Rs. 10 lakh to Rs. 20 lakh. This would apply to buying, selling, gifting, or entering into joint development agreements for property. The change is being proposed because property prices have gone up over the years, and the old Rs. 10 lakh limit is now considered outdated.
5. Insurance Accounts to Come Under PAN Net
As per the current rules, if the total annual life insurance premiums exceed Rs. 50,000, a PAN becomes compulsory. As per the new proposal, PAN is now a compulsory requirement to initiate an account-based relationship with an insurer.