New Income Tax Rules From April 2026: PAN Card Limits Relaxed and HRA Benefits for Employees

Income Tax Rules: The Central Government is preparing for a massive overhaul of the income tax system to provide significant relief to the common man. A new income tax law is set to be implemented across the country from April 1, 2026. Under this new regime, not only is the tax filing process being simplified, but regulations surrounding major daily purchases are also being relaxed. From the usage of PAN cards to tax exemptions on house rent, significant changes are on the horizon.

Relaxation in PAN Card Rules

Under the new rules, the mandatory requirement to present a PAN card has been significantly relaxed, offering much-needed relief to citizens. Previously, PAN cards were required even for small transactions, but these limits have now been increased:

• Vehicle Purchase: A PAN card will now only be required for purchasing a car or bike worth more than ₹5 lakh. Previously, it was mandatory for every vehicle purchase regardless of the amount.
• Bank Transactions: A PAN card will now be required only for cash deposits or withdrawals totaling ₹10 lakh or more in a year. The hassle for smaller deposits has been removed.
• Property Transactions: For buying or selling land or houses, the limit for mandatory PAN submission has been raised from ₹10 lakh to ₹20 lakh.
• Hotel Bills: You will only need to show a PAN card at hotels or restaurants if the bill exceeds ₹1 lakh.

Good News for Salaried Employees

There is plenty of good news for salaried individuals in this new law, especially for those who previously could not claim metro city benefits.

• New Metro Cities: Bengaluru, Hyderabad, Pune, and Ahmedabad will now be considered ‘Metro Cities’. Consequently, employees working in these cities can now claim HRA (House Rent Allowance) up to 50% of their basic salary, up from the previous 40%.
• Motor and Food Allowances: A monthly allowance of ₹8,000 for cars up to 1600cc and ₹10,000 for larger cars will be tax-free. Additionally, company-provided food up to ₹200 per meal and employer gifts up to ₹15,000 will be exempt from tax.

Automation in ITR Forms and Crypto Rules

The government is transforming the return filing process for the financial year 2026-27 into a ‘single-click’ system. ITR forms will be pre-filled with data, requiring taxpayers only to verify the information. If any details are incorrect, there will be an option to edit them. However, rules are being tightened for cryptocurrency investors. Disclosing crypto holdings in the ITR form has been made mandatory, and the Tax Department will verify this data directly from crypto exchanges.