The Finance Ministry has proposed an increase in the PAN threshold for several items from April 2026. Details outlined in the draft Income Tax rules also suggest raising the value of perquisites provided by employers and making it mandatory for crypto exchanges to share information with the tax department. The increasing of transaction limits will apply across categories — including cash deposits and with withdrawals at the bank, purchase of motor vehicles and property, and even payment of hotel bills.

Permanent Account Number will not be necessary for certain transactions once the new rules go into effect. The draft also slashes the number of Income Tax rules and forms significantly, and introduces features such as smart pre-filled forms.

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The proposed Income Tax Rules will be will be notified by the first week of March after incorporating public comments. It will replace the Income Tax Rules of 1962 with effect from April 1.

What will change under Income Tax Draft Rules?

  • Quoting PAN will be mandatory for making cash deposits or withdrawals aggregating to Rs 10 lakh or more in a financial year, in one or more accounts of a person. Presently, PAN is required for cash deposits exceeding Rs 50,000 during any one day with a banking company or a cooperative bank.
  • Buyers have to quote their PAN details while purchasing motor vehicles (including motorcycles) if the price exceeds Rs 5 lakh. The current Income Tax Rules, 1962, do not provide for quoting of PAN for purchase of two-wheelers, while for motor vehicles it was mandatory irrespective of price.
  • In case of hotel/restaurant bills, payments made to convention centres or banquet halls or a person engaged in event management, PAN will be mandatory if the payment exceeds Rs 1 lakh. The current I-T Rules specify a Rs 50,000 threshold for quoting PAN in case of hotel/restaurant bills.
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  • PAN will be mandatory for purchase or sale or gift or joint development agreement of any immovable property if the transaction cost is more than Rs 20 lakh, as against the existing limit of Rs 10 lakh.
  • Under the draft rules, PAN will be mandatory for starting an account-based relationship with an insurance company. Currently, payments aggregating to more than Rs 50,000 in a financial year as life insurance premium require PAN.

Employee allowances updated

The Draft Income Tax Rules will also expand tax-free perquisites for salaried employees — including employer-provided meals up to Rs 200 each and car allowances up to Rs 8,000-10,000 monthly (with a driver). The decision was reportedly taken considering the current market realities.

  • 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. These would include allowance for drivers.