The Income Tax Department is planning to make cash transactions simpler for taxpayers.
Under the proposed rules, you may be able to deposit or withdraw up to Rs 10 lakh in cash in a financial year without needing to provide your PAN card.
This move aims to reduce paperwork and make compliance easier.
Right now, under Rule 114B of the Income Tax Act, 1961, PAN is mandatory for cash deposits above Rs 50,000 in a single day.
There is no clear annual withdrawal limit in the existing rules.
The changes are part of the new Income Tax Act, 2025, which will come into effect from April 1.
The Income Tax Draft Rules 2026 are currently open for public review until February 22.
Cash Deposit Rules: What May Change
According to Rule 159 of the draft rules, PAN will be required only if your total cash deposits across all bank accounts reach Rs 10 lakh or more in a financial year.
This means the government will look at your combined deposits in all accounts during the year — not just one account or one transaction.
If your total deposits stay below Rs 10 lakh for the year, you may not need to quote your PAN.
Cash Withdrawal Rules: Same Rs 10 Lakh Limit
The same Rs 10 lakh annual limit applies to cash withdrawals.
If your total withdrawals from banks, co-operative banks or post offices cross Rs 10 lakh in a financial year, you will have to provide your PAN.
If the total stays below that limit, PAN may not be required.
In simple terms, small and moderate cash users could face fewer compliance hurdles under the new system.
Other Important PAN Rule Changes
The draft rules also revise PAN requirements for other transactions.
For vehicle purchases, PAN will now be required only if the value exceeds Rs 5 lakh.
Earlier, PAN was needed for most vehicles except two-wheelers.
For property deals, the PAN requirement threshold has been increased to Rs 20 lakh, up from Rs 10 lakh earlier.
There is also relief for hotel payments.
PAN will not be required for hotel bills below Rs 1 lakh, compared to the earlier Rs 50,000 limit.
However, PAN has been made mandatory for account-based relationships with insurance companies.
Overall, if these draft rules are implemented, many taxpayers could see reduced paperwork for routine cash transactions — while large transactions will continue to remain under tighter scrutiny.
