The Government of India has proposed significant changes to when a Permanent Account Number (PAN) must be used for financial and banking transactions. These changes are part of the Draft Income‑Tax Rules, 2026, which are expected to replace older provisions and modernise transaction reporting.

What Is PAN and Why Is It Important?

A PAN (Permanent Account Number) is a 10‑character alphanumeric identifier issued by the Income‑tax Department. It is used to:

• Track financial transactions
• Prevent tax evasion
• Link various accounts and financial activities
  Traditionally, PAN had to be quoted for many banking transactions to comply with tax and compliance norms.

New Threshold for PAN Requirement in bank Transactions

🆕 Bank Transactions Up to ₹10 Lakh Per Year

Under the new draft rules:

• PAN will not be required if total **cash deposits or withdrawals from a bank account do not exceed ₹10 lakh in a financial year.
• This replaces older daily limits that required PAN even for much smaller cash transactions.

➡️ Earlier, PAN was mandatory if you deposited more than ₹50,000 in cash in a single day.
Now, compliance is based on the aggregate annual amount instead of small daily thresholds.

👉 This is the major change that means PAN is no longer required for many everyday bank transactions up to ₹10 lakh in one year.

Why This Change Matters

✅ Eases Compliance for Small Account Holders

People who:

• deposit salary savings,
• receive remittances,
• or handle routine cash flows,

will no longer need to carry or quote their PAN for these activities — provided the total stays below ₹10 lakh a year.

⚖️ Moves from Daily to Annual Limits

Instead of multiple daily reporting thresholds, the rules now consider total cash flow over the entire year, which is more practical and reduces paperwork.

Other Major PAN Threshold Changes Under Draft Rules

The proposed new rules also adjust PAN requirements in several other areas (still in draft, expected finalisation by April 1, 2026):

🚗 Vehicle Purchases

• PAN not required if buying a vehicle costing less than ₹5 lakh.
• Above that, quoting PAN becomes mandatory.

🏠 Property & Real Estate

• PAN not needed for property transactions up to ₹20 lakh.
• Earlier, it was ₹10 lakh.

🍽️ Hotel, Restaurants & Events

• For bills up to ₹1 lakh, PAN may not be required.
• Earlier the threshold was ₹50,000.

These changes aim to reduce compliance burdens for small and medium‑value activities while still requiring PAN for high‑value or tax‑relevant dealings.

When Will These Rules Come Into Effect?

• These proposals are part of the Draft Income‑Tax Rules, 2026.
• The government is inviting public feedback on the draft.
• Once finalised — likely by March 2026 — the new rules could be implemented from April 1, 2026 onwards.

So, the relaxed PAN requirements are proposed but not yet officially in force until the rules are formally notified.

Who Still Needs to Use PAN?

Even with these relaxed limits:
✔ High‑value financial transactions (above thresholds like ₹10 lakh)
✔ Tax returns and filings
✔ Large investments, bank account openings, credit facilities
✔ business or professional income
still require a valid PAN.

Additionally, PAN must be linked with Aadhaar by prescribed deadlines, otherwise transactions could be affected.

Summary: Key Takeaway for bank Transactions

Transaction Type

PAN Required?

Notes

Cash deposits/withdrawals ≤ ₹10 lakh/year

❌ Not required under draft rules

Big relief for small accounts

Cash funds > ₹10 lakh/year

✔ Required

High‑value reporting continues

Other financial services (tax filing, investments)

✔ Required

As per law

Conclusion

The PAN requirement for certain bank transactions in india is likely to be relaxed significantly under the Draft Income‑Tax Rules, 2026 — especially for cash deposits and withdrawals up to ₹10 lakh a year. This change aims to simplify compliance and reduce paperwork for ordinary account holders, while still keeping PAN mandatory for higher‑value and tax‑relevant transactions. The draft rules are expected to be finalised around April 1, 2026.

 

Disclaimer:

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