Draft Income Tax Rules 2026 may increase PAN threshold: What it means for you, your bills

The Draft Income Tax Rules have proposed raising the transaction limit for quoting of PAN for cash deposits, cash withdrawals, purchase of motor vehicles, purchase of property and payment of hotel bills. The draft also proposes making it mandatory for crypto exchanges to share information with the tax department as well as has included Central Bank Digital Currency (CBDC) as an accepted mode of electronic payment. 

The list of Category 1 metropolitan cities for the purpose of claiming house rent allowance have also been expanded to include Bengaluru, Pune, Ahmedabad, and Hyderabad, apart from Delhi, Mumbai, Kolkata, and Chennai.

The rules will be finalised by the first week of March by Central Board of Direct Taxes (CBDT), said finance ministry sources to news agency PTI. 

CHANGE IN PAN THRESHOLD: WHAT IT MEANS

Here's how the change in the PAN threshold will shape your expenditure: 

• PAN is required for cash deposits exceeding Rs 50,000 in a day with a banking or a cooperative bank, but as per the proposed rules, you will have to mandatorily quote the PAN if you are making cash deposits or withdrawals aggregating to Rs 10 lakh or more in a financial year.
• If you are purchasing a motor vehicle, you will have to quote the PAN if the price exceeds Rs 5 lakh. This includes two-wheelers too, unlike the current rules that does not require PAN for purchase of two-wheelers but is mandatory for cars irrespective of price. 
• You would need to quote the PAN if you are paying over Rs 1 lakh in bills at hotels, restaurants, convention centres, banquet halls, or to an event manager. Currently, the threshold is Rs 50,000. 
• If you are purchasing, selling, gifting or jointly developing any immovable property, you will have to quote the PAN if the cost is more than Rs 20 lakh. It is an increase from the current Rs 10 lakh. 
• Now starting an account-based relationship with an insurance company would also require the PAN, as against the current rules of payments aggregating to more than Rs 50,000 in a financial year. 
• The draft proposes the value of tax-free perquisites for official vehicles and free meals to be increased. In case of free food and non-alcoholic beverages provided by the employer to an employee, the perquisite value has been fixed at Rs 200 per meal. For motor cars, the allowance of cars below the engine capacity of 1.6 litres will be Rs 8,000/month, while for others it will be Rs 10,000/month.