Income Tax Draft Rules 2026: Cash Deposit, Withdrawal Limits And PAN Changes Explained
Income Tax Draft Rules 2026: Cash Deposit, Withdrawal Limits And PAN Changes Explained
From April 1, 2026, new draft rules propose higher limits for cash transactions without PAN and revised thresholds for property, vehicles and hotel payments.
The Income Tax Department has proposed significant changes under the Draft Income Tax Rules 2026 that aim to ease compliance for taxpayers, especially for routine cash transactions.
Under the current Rule 114B of the Income Tax Act, 1961, a PAN card is required for cash deposits exceeding Rs 50,000 in a single day. However, the draft rules propose a shift from daily limits to an annual aggregate limit.
If implemented, individuals will be allowed to deposit or withdraw up to Rs 10 lakh in a financial year without quoting their Permanent Account Number (PAN). PAN will become mandatory only when the total deposits or withdrawals across all bank, co-operative bank or post office accounts cross Rs 10 lakh in a financial year.
According to Rule 159 (Table Sl. No. 7) of the Draft Income Tax Rules 2026, withdrawals from banking companies, co-operative banks or post offices will require PAN once the aggregate amount reaches Rs 10 lakh or more in a financial year.
This means smaller or routine transactions below the annual threshold may face less documentation, reducing compliance burden for common taxpayers.
The draft rules also propose revisions in PAN requirements for other high-value transactions.
For immovable property transactions including sale, purchase, gift or joint development agreements, the threshold is proposed to be increased from Rs 10 lakh to Rs 20 lakh.
In the case of motor vehicles, PAN will be required for vehicles priced above Rs 5 lakh. Earlier, PAN was required for most vehicles except two-wheelers, but the revised proposal standardises the rule based on value. Tractors remain exempt.
For hotel and restaurant bills, the threshold is proposed to be raised from Rs 50,000 to Rs 1 lakh. PAN will be required only when the bill exceeds Rs 1 lakh.
Additionally, PAN has been made mandatory for account-based relationships with insurance companies under the draft framework.
The proposed rules are currently open for public feedback on the Income Tax portal until February 22, 2026. If approved, they will come into effect from April 1, 2026.
Taxpayers are advised to ensure that their PAN, Aadhaar and bank accounts are properly linked to avoid complications once the new rules are notified.
