The Income-Tax Department has released the Draft Income-tax Rules, 2026, proposing updates to when quoting your Permanent Account Number (PAN) will be mandatory.
These changes are part of a broader effort to modernise reporting requirements, improve compliance tracking, and streamline financial transparency. The rules are currently in draft stage and will be finalised after stakeholder consultation.
Why This Matters
PAN is already required for many financial transactions such as:
- Filing income tax returns
- High-value property transactions
- Certain banking transactions
- Securities and mutual fund investments
The draft rules aim to rationalise and update thresholds, in some cases raising limits to reduce paperwork for small transactions while ensuring large transactions remain traceable.
Failure to quote PAN where required may result in:
- Higher TDS/TCS rates
- Penalties under the Income-tax Act
- Reporting non-compliance issues
Key Proposed PAN Quoting Requirements (Draft – Not Final)
Below are the major proposals that have been reported from the draft rules:
Cash Deposits & Withdrawals
Proposed threshold:
PAN required if aggregate cash deposits or withdrawals exceed ₹10 lakh in a financial year
This applies across bank accounts (including cooperative banks and post offices).
What changed?
The draft shifts toward an annual aggregate threshold instead of smaller transaction-wise triggers — potentially reducing compliance burden for routine banking activity.
Immovable Property Transactions
Proposed threshold:
PAN mandatory for property transactions exceeding ₹20 lakh
This applies to sale, purchase, exchange, or similar transfers.
Earlier threshold: ₹10 lakh (under prior rules)
This effectively increases the reporting threshold.
Motor Vehicle Purchases
Proposed threshold:
PAN required for purchase of motor vehicles valued above ₹5 lakh
This may include certain high-value two-wheelers as well.
Hotel / Hospitality Cash Payments
Proposed threshold:
PAN required for cash payments exceeding ₹1 lakh at hotels, restaurants, or banquet halls.
This represents an upward revision from the earlier ₹50,000 trigger.
Opening Certain Financial Accounts
PAN will continue to be mandatory for:
- Opening current accounts
- Opening cash credit accounts
- Initiating certain financial or insurance relationships
These provisions largely consolidate and clarify existing requirements.
What Is NOT Confirmed in the Draft
Based on currently available draft summaries, there is no confirmed proposal introducing new PAN thresholds specifically for:
- UPI / IMPS / RTGS digital transfers
- Retail QR-code receipts
- Education fees above ₹2 lakh
- Mutual fund or share trades at ₹1 lakh per transaction
- Business turnover at ₹20 lakh triggering PAN collection
Such items should not be treated as part of the official draft unless explicitly notified.