PAN might become necessary for hotel bills above ₹1L
What's the story
The Indian government has proposed major changes in the new Income Tax Rules, 2026. The draft rules suggest raising the monetary thresholds for quoting PAN during various transactions such as buying vehicles, making cash withdrawals or deposits from banks, purchasing property and paying hotel bills. The changes could potentially simplify compliance with tax regulations and reduce the burden on taxpayers.
Transaction limits
Mandatory PAN for cash transactions
Under the proposed rules, quoting PAN will be must for cash deposits or withdrawals of up to ₹10 lakh or more in a financial year. This rule applies to one or more accounts of a person. The threshold for quoting PAN while buying motor vehicles has also been revised. Buyers will have to quote their PAN if the price exceeds ₹5 lakh. Previously, there was no requirement to quote PAN for the purchase of two-wheelers.
Sector impact
Proposed changes in hospitality sector
The proposed rules also extend the PAN requirement to the hospitality sector. For hotel or restaurant bills, payments made to convention centers or banquet halls will require a PAN if the payment exceeds ₹1 lakh. This is a significant increase from the current threshold of ₹50,000. The limit for buying/selling/gifting/jointly developing any immovable property has also been raised from ₹10 lakh to ₹20 lakh under these draft income tax rules.
Additional provisions
Other significant recommendations
The rules also mandate quoting PAN for starting an account-based relationship with an insurance company. This was already necessary for payments aggregating to more than ₹50,000 in a financial year as life insurance premium. The draft also proposes raising the value of perquisites provided by employers and making it mandatory for cryptocurrency exchanges to share information with the income tax department.
Rule finalization
New Income Tax Act to come into effect from April
The New Income Tax Act, 2025 will come into effect from April 1, 2026. This is after the finalization of the new rules. The Central Board of Direct Taxes (CBDT) will finalize these rules after stakeholder consultation and notify them by early March. These changes could potentially streamline India's tax system and make it more taxpayer-friendly.