PAN relaxation from April 1: Cash deposits and withdrawals up to ₹10 lakh allowed without PAN

New Income Tax Draft Rules 2026 aim to simplify compliance, revise PAN requirements for cash transactions, vehicle purchases, property deals, hotel bills, and insurance accounts.

The Income Tax Department has proposed major changes to simplify compliance norms under the Income Tax Draft Rules 2026, allowing individuals to deposit and withdraw cash up to ₹10 lakh in a financial year without quoting a PAN number. The new rules will come into force from April 1, alongside the implementation of the Income Tax Act, 2025.

At present, under Rule 114B of the Income Tax Act, 1961, any cash deposit exceeding ₹50,000 in a single day requires mandatory PAN submission. While there was no clear annual ceiling for cash withdrawals, strict documentation was required for large transactions. The revised framework now introduces a clear annual limit of ₹10 lakh for combined cash deposits and withdrawals across one or multiple bank accounts without PAN.

The draft rules, currently open for public feedback until February 22, aim to streamline compliance and reduce procedural hurdles for common financial transactions. According to Rule 159 (Table Serial No. 6) of the draft, individuals must quote their PAN in specified transactions, but cash deposits up to ₹10 lakh in a financial year will be exempt from this requirement.

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In addition to cash transaction reforms, the new draft rules also revise PAN thresholds for other major financial dealings:

•    Vehicle purchases: PAN will now be required only for vehicles and motorcycles priced above ₹5 lakh, whereas earlier, PAN was mandatory for all vehicles except two-wheelers.
•    Property transactions: The PAN requirement threshold has been increased to ₹20 lakh, up from the earlier ₹10 lakh limit, offering relief to mid-range property buyers.
•    Hotel bills: PAN will no longer be mandatory for hotel bills below ₹1 lakh, compared to the previous threshold of ₹50,000.
•    Insurance accounts: PAN has now been made compulsory for all account-based relationships with insurance companies.

Officials say the changes are designed to ease compliance, encourage transparency, and reduce unnecessary documentation burdens, especially for everyday banking and consumer transactions. The government expects these revised norms to support smoother financial operations while maintaining oversight for high-value dealings.

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