How can 5 Pan card changes in draft Income Tax rules impact daily transactions?

The Centre has proposed significant revisions to the rules governing when quoting a Permanent Account Number (PAN) is mandatory, under the Draft Income Tax Rules, 2026. The proposed changes raise monetary thresholds for several routine financial transactions, potentially easing compliance for smaller dealings while retaining scrutiny over high-value transactions. The draft rules are aligned with the new Income Tax Act, 2025, which is set to come into force from April 1, 2026, and are currently open for public feedback.

One of the key proposals relates to cash deposits and withdrawals. Under the draft norms, individuals will be required to quote PAN only if cash deposits or withdrawals amount to Rs 10 lakh or more in a financial year across one or multiple bank accounts. At present, PAN is mandatory for cash deposits exceeding Rs 50,000 in a single day. The proposed shift from daily to annual aggregate reporting marks a substantial change in compliance requirements.

The draft also revises PAN requirements for vehicle purchases. If approved, PAN will need to be quoted only when the value of a motor vehicle, including two-wheelers, exceeds Rs 5 lakh. Currently, PAN is compulsory for motor vehicle purchases irrespective of cost, with certain exemptions for two-wheelers. The new threshold aims to rationalise compliance based on transaction value.

In the hospitality and events sector, PAN will be mandatory only when payments to hotels, restaurants, banquet halls, convention centres or event managers exceed Rs 1 lakh. The existing rule requires PAN for bills above Rs 50,000. Similarly, for immovable property transactions, the threshold is proposed to be raised from Rs 10 lakh to Rs 20 lakh for purchase, sale, gift or joint development deals, reflecting rising property values.

The draft further expands PAN compliance in the insurance sector by making it mandatory at the stage of initiating an account-based relationship with an insurer. Currently, PAN is required only when annual life insurance premiums exceed Rs 50,000. The Central Board of Direct Taxes has released the draft framework for consultation, and final rules are expected to be notified before the new tax regime takes effect in April 2026.