The Union Budget 2026 has proposed major changes to PAN card requirements under the draft Income Tax Rules, with the objective of simplifying compliance for the common man while continuing to monitor high-value transactions. The draft rules, released by the Central Board of Direct Taxes (CBDT) for public consultation, are expected to come into force from April 1, 2026, along with the new Income Tax Act, 2025. The proposed amendments are expected to reduce paperwork in routine financial activities and bring relief to small and middle-income earners. Below are the five key PAN-related changes announced in the draft rules:
• Cash deposits and withdrawals: Currently, PAN details are required for cash deposits or withdrawals exceeding ₹50,000 in a single day. Under the proposed rule, PAN will be mandatory only if the total cash transactions across all bank accounts exceed ₹10 lakh in a financial year. This change is aimed at easing daily banking for salaried individuals and small savers.
• Purchase of vehicles: Earlier, PAN was required for purchasing any car or two-wheeler, irrespective of its price. As per the draft rules, PAN will now be mandatory only if the vehicle costs more than ₹5 lakh. This is expected to benefit buyers of mid-range and second-hand vehicles by reducing documentation.
• Property transactions: At present, PAN is required for property deals valued above ₹10 lakh. The proposed amendment increases this threshold to ₹20 lakh, offering relief to buyers and sellers involved in smaller real estate transactions, particularly in tier-2 and tier-3 cities.
• Hotel, restaurant, and event bills: PAN details are currently required for bills exceeding ₹50,000 at hotels, restaurants, or events. The new draft raises this limit to ₹1 lakh per bill, which is expected to simplify payments during weddings, vacations, and large social gatherings.
• Insurance policies: Previously, PAN was required only if annual life insurance premiums exceeded ₹50,000. Under the proposed rules, PAN will be mandatory at the time of initiating any account-based insurance policy, a step aimed at improving financial transparency and tracking from the beginning.
Overall, the proposed PAN reforms are intended to cut down unnecessary compliance, save time, and reduce friction in everyday transactions for the common man. While smaller transactions will see relaxed requirements, high-value dealings will continue to remain under tax scrutiny.
In addition to PAN-related changes, the draft Income Tax Rules also propose higher limits for employer perquisites, mandatory reporting of cryptocurrency transactions, and recognition of Central Bank Digital Currency (CBDC) as a valid electronic payment method. The CBDT has invited public comments on the draft, and the final rules are expected to be notified before March 2026.
If implemented, the revised PAN norms could significantly change how individuals interact with banks, businesses, and service providers, making routine transactions smoother while ensuring continued tax compliance for larger financial activities.