The draft Income Tax Rules, 2026, propose changes to the rules for using PAN. This will impact your everyday financial transactions, including cash withdrawals and deposits into bank accounts, purchases of cars/bikes and property, and payment of hotel bills.
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New Income Tax Draft Rules: The rules regarding the use of PAN for various financial transactions may change. This is proposed in the Draft Income Tax Rules, 2026. This will impact your everyday financial transactions, including cash withdrawals and deposits from bank accounts, purchases of cars/bikes and property, and payment of hotel bills.
The Income Tax Department has presented a draft of the new Income Tax Rules. Comments are available until February 22nd. After receiving feedback, the Income Tax Department will present the final rules.
Motor Vehicle Transactions
Currently, PAN is required for transactions involving all vehicles except scooters and bikes. There is no set limit for these transactions. The Draft Income Tax Rules state that PAN will be required for transactions involving vehicles valued at more than ₹5 lakh, including two-wheelers. This rule will not apply to tractors.
Hotel/Restaurant Bills
Currently, PAN is required for cash payments exceeding ₹50,000 at a time to hotels or restaurants. The draft rules state that this limit will be increased to ₹1 lakh. This means that PAN will be required for transactions exceeding ₹1 lakh. This will reduce compliance.
Life Insurance Premium
Currently, PAN is required if the annual premium for a life insurance policy exceeds ₹50,000. The draft rules state that PAN will now be required for all account-based relationships. This means that transactions related to life insurance premiums will be covered.
Property Transactions
Currently, PAN is required for property transactions exceeding ₹10 lakh. The draft rules increase this limit to ₹20 lakh. This will reduce compliance for lower-value property transactions.
Withdrawals from Banks/Post Offices
Currently, cash withdrawals exceeding ₹20 lakh in a financial year are required to be reported. This limit has been reduced to ₹10 lakh in the draft rules. This step has been taken to curb tax evasion.
