Draft Income Tax Rules, 2026: What the new PAN Card rules mean for you

As you prepare for the implementation of the Income Tax Act, 2025, the government has introduced the Draft Income Tax Rules, 2026. If notified in their current form, they will be operationalised from April 1, 2026. One of the most pivotal shifts in these rules is the requirement to quote your Permanent Account Number (PAN).  

Under the proposed Income Tax Act and rules, the scope of transactions requiring PAN disclosure will widen. These new rules for PAN Card compliance aim to tighten reporting requirements for cash transactions, investments, property purchases, and other high-value payments. 

Here’s a clear breakdown of what’s changing and how it may impact your next bank transaction. 

Rule 159 lists the following transactions for which quoting the PAN will be mandatory.

1. Cash deposits and withdrawals 

Under the new income tax rules on cash deposit limits, PAN is mandatory once your total cash deposits exceed ₹10 lakh in a financial year. The threshold applies to the combined amount deposited across one or more accounts in a banking company, a co-operative bank, or a post office. Splitting deposits into smaller instalments will not prevent the reporting of the PAN requirement for cash deposits.

A similar standard applies to withdrawals. Under the new rules for cash withdrawal from bank accounts, PAN becomes mandatory if your total cash withdrawals across accounts in a banking company, a co-operative bank, or a post office reach ₹10 lakh in a financial year.

2. Opening accounts, Credit Cards, and insurance relationships

Under the new income tax rules, quoting PAN becomes mandatory when:

a. Applying for a Credit Card
b. Opening a bank account (other than a Basic Savings Bank Deposit Account)
c. Opening an account with a depository or SEBI-registered intermediary
d. Starting an account-based relationship with an insurer

In effect, most formal financial relationships will now begin with verified PAN details.   

3. Investments 

Investments are another major area affected by these PAN card changes. You will need to quote PAN when you:

a. Invest more than ₹50,000 in mutual funds
b. Purchase RBI bonds above ₹50,000
c. Invest in debentures or bonds above ₹50,000
d. Enter into time deposits (FDs) exceeding ₹50,000, or aggregating to more than ₹5 lakh, within a banking company, a co-operative bank, a post office, a Nidhi company, or an NBFC in a financial year
e. Buy or sell securities (other than shares) exceeding ₹1 lakh per transaction
f. Purchase unlisted company shares exceeding ₹1 lakh

These thresholds are not extremely high. Many ordinary investment decisions can fall within them.

4. Property transactions

Property transactions continue to attract scrutiny.

If you buy, sell, gift, or enter into a joint development agreement for immovable property valued above ₹20 lakh - or where the stamp valuation exceeds ₹20 lakh - PAN is mandatory. Further, if a person without a PAN enters into a property transaction exceeding ₹45 lakh, they must apply for a PAN before completing the transaction.

Given the scale of property values in most urban areas, this is one of the most significant implications of the updated income tax rules. 

5. High-value goods and services 

The scope of Rule 159 goes beyond banking and property. Your PAN is a must if you:

a. Purchase or sell goods or services exceeding ₹2 lakh per transaction (where not otherwise covered)
b. Make cash payments exceeding ₹1 lakh at a hotel, restaurant, banquet hall, convention centre, or event management company 
c. Purchase a motor vehicle (other than a tractor) exceeding ₹5 lakh 

This means certain lifestyle or business expenses can now be subject to mandatory reporting. A single high-value bank transaction or cash payment can trigger PAN disclosure. 

The proposed PAN Card changes under the Draft Income Tax Rules expand the scope of transactions for which quoting PAN is mandatory. From routine bank transaction activity to investments, property deals, and high-value spending, compliance expectations are clearer and more structured under the new income tax rules. 

Staying informed about these updates under the Income Tax Act and Rules can help you avoid delays, reporting issues, or penalties while carrying out important financial transactions. 

*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.