New PAN Rules From April 1: Big Relief for Small Transactions, Tougher for Cash

Pan Rules Change: The Government of India is set to introduce significant changes to the regulations governing the usage of the Permanent Account Number (PAN) for financial transactions. In a move aimed at simplifying the lives of the common public while tightening the noose on tax evasion in high-value deals, the Central Board of Direct Taxes (CBDT) has drafted new guidelines. These changes are part of the draft Income Tax Rules 2026, expected to be implemented under the upcoming Income Tax Act 2025, effective from April 1st.

The core objective of this overhaul is to eliminate the requirement of producing a PAN card for routine, small transactions. However, the government is simultaneously increasing scrutiny on large cash flows to trace the source of funds effectively.

Key Highlights of the Draft Income Tax Rules 2026

The proposed rules suggest raising the monetary threshold for various transactions where quoting PAN was previously mandatory. This means less paperwork for average citizens but stricter monitoring for high-net-worth individuals making large cash movements.

According to the draft proposal, the following changes are likely to be implemented:

• Bank Cash Transactions: The limit is set to be hiked significantly. PAN will be mandatory only if the total cash deposit or withdrawal from bank accounts exceeds ₹10 lakh in a financial year.
• Vehicle Purchase: Currently, PAN is required for almost all vehicle purchases. Under the new rules, PAN will be required only if the purchase value of a motor vehicle exceeds ₹5 lakh. Interestingly, this will now also cover two-wheelers if they cross this price threshold.
• Property Dealings: For buying, selling, gifting, or joint development agreements regarding property, the mandatory PAN requirement limit is proposed to be set at ₹20 lakh.
• Hospitality & Events: A new clause suggests that payments exceeding ₹1 lakh to hotels, restaurants, banquet halls, or event managers will require PAN.
• Insurance: Entering into account-based relationships with insurance companies will also mandate PAN usage.

Comparison: Current Rules vs. Proposed Rules

To understand the impact of these changes, it is essential to look at the existing regulations versus what is being proposed for April 1st.

1. Cash Deposits:

• Current: PAN is required for cash deposits of more than ₹50,000 in a single day.
• Proposed: PAN is required if total annual cash deposits/withdrawals hit ₹10 lakh.

2. Motor Vehicles:

• Current: Mandatory for all motor vehicles (excluding two-wheelers).
• Proposed: Mandatory only if the value exceeds ₹5 lakh (includes expensive two-wheelers).

3. Property Transactions:

• Current: Mandatory for property valued above ₹10 lakh.
• Proposed: Mandatory for property valued above ₹20 lakh.

What Comes Next?

The CBDT is currently in the process of gathering suggestions and feedback from stakeholders regarding these draft rules. A final decision is expected by early March. Once finalized, the notification will be issued, and the new norms will officially come into force starting April 1, coinciding with the new financial year and the Income Tax Act 2025.

These changes indicate a shift towards a more data-driven tax administration where small taxpayers are spared from compliance burdens, while big-ticket transactions are brought under a clearer radar to prevent fraud and black money circulation.