New PAN Rules From April 2026: What Taxpayers Need to Know

The Indian tax compliance system is yet again facing another set of changes as the government releases the Draft Income-tax Rules for the year 2026. This framework has proposed several important changes which are specifically related to the Permanent Account Number (PAN). This draft consists of rules that are open for public feedback and are most likely to come into effect on April 01, 2026, after the final approval. The proposed changes aim to simplify compliance while ensuring strong financial tracking and transparency.

A PAN card has long served as the main requirement for financial transactions in India. Over the years, the government has expanded the use of the PAN card to track high-value transactions and deal with tax evasion activity in the country. This new draft still continues this trend, but the updates proposed reflect the changing realities in the economy, inflation and digital banking adoption. By proposing this revision and expanding the requirements, authorities aim to reduce the unnecessary paperwork for smaller transactions. Here are the following changes proposed.

Change in Cash Deposit and Withdrawal Limits

One of the prime features of PAN is to maintain the smooth operation of transactions. Currently, PAN must be shown as proof when depositing more than Rs 50,000 in a single day from a bank or post office. The draft rules propose major shifts, such as exceeding this higher limit, where PAN will be required for cash deposits of Rs 10 lakh in a financial year across all bank accounts. The same limit is applied for cash withdrawals. This change shows a change in intention, where the government wants to track the overall cash activity, moving away from isolated transactions.

PAN Requirement for Two-Wheeler Motor Vehicle Purchases

As per the present rules, PAN is required for a majority of motor vehicle purchases except motorbikes. The draft rules now propose requiring PAN to purchase any motor vehicle, which includes motorbikes, priced above Rs 5 lakh. This change brings a uniform pattern to buying vehicles and acknowledges the rising cost of two-wheelers and bikes in the premium categories. It ensures that purchases of high-value nature are recorded properly for tax purposes.

Higher Threshold for Hotel and Restaurant Bills

Currently, PAN must be provided for hotel or restaurant bills that exceed Rs 50,000. This is proposed to be increased to Rs 1 lakh. This revision also reflects the inflation and higher spending patterns that are being witnessed in the country.

Higher Limit for Property Transactions

Tax authorities closely monitor the transactions that take place in the real estate sector. Currently, PAN is required for transactions above Rs 10 lakhs; the new proposal increases this threshold to Rs 20 lakh. This change is significant when the property price rise is taken into consideration.

PAN Requirement for Insurance Relationships

Presently, PAN is required only when annual insurance premiums exceed the Rs 50,000 mark. The draft rules propose the expansion of this requirement to cover all account-based relationships with the insurance companies. This means that the PAN might become compulsory for buying or maintaining insurance policies, regardless of the premium size.

If this draft gets implemented, these changes could reduce several pieces of paperwork while also increasing transparency in the high-value financial activities. The rollout of the draft is expected to be in April 2026; the coming months will be quite crucial for feedback and the final updates in these proposed rules. As of now, taxpayers should stay informed and should prepare for a more streamlined financial system in the country.