The Indian government has proposed significant changes to Permanent Account Number (PAN) quoting requirements under the draft Income Tax Rules, 2026, set to take effect from April 1, 2026. These revisions, aligned with the new Income Tax Act, 2025, aim to reduce compliance burdens for smaller transactions while enhancing monitoring of higher-value ones. The changes primarily affect cash deposits and withdrawals, purchases of motor vehicles (including cars and motorcycles), and payments for hotel and restaurant bills, among others.
### Key Proposed Changes
Cash Deposits and Withdrawals — Currently, quoting PAN is mandatory for cash deposits exceeding ₹50,000 in a single day at a bank, cooperative bank, or post office. The draft rules propose raising this threshold to aggregate cash deposits or withdrawals of ₹10 lakh or more in a financial year across one or more accounts. This shift from a daily to an annual limit is expected to ease paperwork for routine banking while flagging larger cash movements for tax scrutiny.
Purchase of Motor Vehicles (Car Sales) — The requirement for quoting PAN during vehicle purchases is being refined. PAN will be mandatory only if the purchase price exceeds ₹5 lakh (covering cars, motorcycles, and other motor vehicles). This introduces a clear monetary threshold, potentially simplifying compliance for buyers of lower-priced vehicles, including many two-wheelers that previously fell under stricter or unclear rules.
Hotel and Restaurant Bills (Hospitality Sector) — PAN quoting for payments to hotels, restaurants, convention centers, banquet halls, event management services, or similar is currently required for amounts over ₹50,000. The proposed rules double this limit to ₹1 lakh or more. This provides relief for moderate hospitality spending, such as family vacations, weddings, or business events, while maintaining oversight on larger bills.
These updates are part of broader efforts to modernize tax compliance, reduce unnecessary reporting for everyday transactions, and focus resources on high-value activities that could involve unreported income. The Central Board of Direct Taxes (CBDT) released the draft for public feedback (with comments due by February 22, 2026), after which final rules will be notified.
Experts view the changes as taxpayer-friendly for the average individual, as they minimize frequent PAN submissions for modest cash handling, affordable vehicles, and typical hotel stays. However, they continue India's push toward greater financial transparency and digital tracking.
The new framework will apply from the start of the financial year 2026-27 (April 1, 2026), replacing outdated provisions from the 1962 rules. Taxpayers are advised to stay updated on the final notifications from the Income Tax Department.
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