Draft Income Tax rules propose higher PAN thresholds, new crypto reporting norms
Draft Income Tax Rules propose higher PAN limits for cash transactions, property, vehicles, and hotel bills, expand metro cities for HRA, revise perquisite values, and mandate crypto exchanges to share data with tax authorities.
Draft Income Tax Rules have proposed significantly raising transaction limits for quoting of Permanent Account Number (PAN) for cash deposits and withdrawals in banks, purchase of motor vehicles and property, and payments towards hotel and event-related bills.
According to the proposed Income Tax Rules, 2026, quoting of PAN will be mandatory for cash deposits or withdrawals aggregating to Rs 10 lakh or more in a financial year, across one or more accounts of a person. At present, PAN is required for cash deposits exceeding Rs 50,000 in a single day with a banking company or cooperative bank.
Changes in PAN requirements for vehicles and property
For the purchase of motor vehicles, including motorcycles, buyers will be required to quote PAN if the vehicle price exceeds Rs 5 lakh.
Under the current Income Tax Rules, 1962, quoting PAN was mandatory for motor vehicles irrespective of price, while no such requirement existed for two-wheelers. In the case of purchase, sale, gift, or joint development agreements involving immovable property, PAN will be mandatory if the transaction value exceeds Rs 20 lakh, compared to the existing threshold of Rs 10 lakh.
Higher limits for hotel and event payments
PAN quoting will be mandatory for hotel and restaurant bills, payments to convention centres or banquet halls, and payments made to event management service providers if the amount exceeds Rs 1 lakh.
Currently, the threshold for quoting PAN in such cases stands at Rs 50,000.
Insurance accounts to require PAN
Under the draft rules, PAN will be mandatory for starting an account-based relationship with an insurance company. At present, PAN is required only when life insurance premium payments aggregate to more than Rs 50,000 in a financial year.
Expansion of metro cities for HRA
The draft rules have expanded the list of Category 1 metropolitan cities for the purpose of claiming House Rent Allowance (HRA). Bengaluru, Pune, Ahmedabad, and Hyderabad have been added to the existing list of Delhi, Mumbai, Kolkata, and Chennai.
Revised tax-free perquisite values
The value of tax-free perquisites provided by employers is proposed to be enhanced to reflect current market conditions.
For free food and non-alcoholic beverages provided by employers, the perquisite value has been fixed at Rs 200 per meal.
For official motor cars, the monthly allowance will be Rs 8,000 for vehicles with engine capacity below 1.6 litres and Rs 10,000 for other vehicles. These amounts include driver-related allowances.
Crypto reporting and CBDC inclusion
The draft rules propose detailed reporting and due-diligence obligations for crypto-asset service providers, making it mandatory for crypto exchanges to share information with the Income Tax Department. The rules also include Central Bank Digital Currency (CBDC) as an accepted mode of electronic payment.
Rules to be notified by March
Finance Ministry sources said the Central Board of Direct Taxes (CBDT) will finalise the rules after stakeholder consultations and notify them by the first week of March. The Income Tax Rules are being finalised to give effect to the Income Tax Act, 2025, which is scheduled to be implemented from April 1.
Sources added that the intent behind rationalising PAN quoting thresholds is to capture only relevant information while leveraging technology-enabled reporting mechanisms under the Income Tax Act.
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