Key Highlights of the Draft Income Tax Rules 2026
- Cash Transactions: PAN mandatory only for annual aggregate deposits or withdrawals of ₹10 lakh or more.
- Vehicle Purchases: A uniform ₹5 lakh threshold introduced for both cars and two-wheelers.
- Real Estate: PAN requirement for property transactions doubled from ₹10 lakh to ₹20 lakh.
- Hospitality and Events: Limit for quoting PAN on hotel and banquet bills raised to ₹1 lakh.
- Insurance Sector: PAN now mandatory for initiating any account-based relationship with insurers.
- Digital Assets: Formal reporting for crypto exchanges and recognition of CBDC as electronic payment.
In the wake of the Union Budget 2026 presented by Finance Minister Nirmala Sitharaman, the Central Board of Direct Taxes (CBDT) has released a comprehensive draft of the new Income Tax Rules 2026. These rules are designed to operationalise the transition to the Income Tax Act 2025, which is set to replace the decades-old 1961 Act starting April 1, 2026. The new framework significantly reduces the regulatory burden, cutting the number of rules from 511 to 333 and streamlining forms from 399 down to 190.
Major Revisions in PAN Card Requirements
The draft rules focus on “relevant information” by raising the monetary thresholds for mandatory PAN disclosure, effectively exempting smaller, routine transactions from heavy documentation.
1. Aggregate Cash Limits
Perhaps the most significant change is the shift from daily to annual monitoring. Currently, PAN is required for cash deposits exceeding ₹50,000 in a single day. The proposed rules eliminate this daily cap, instead mandating PAN only when total cash deposits or withdrawals across all bank accounts reach ₹10 lakh in a financial year.
2. Uniform Vehicle Thresholds
The government has proposed a simplified rule for the automotive sector. Previously, PAN was required for all car purchases regardless of the price, while two-wheelers were exempt. The new draft sets a uniform limit of ₹5 lakh, meaning entry-level bikes and cars below this price point will no longer require a PAN card for the transaction.
3. Real Estate and Hospitality Relief
Reflecting current market valuations, the threshold for quoting PAN in immovable property transactions (sale, purchase, or gifts) is being increased to ₹20 lakh from the existing ₹10 lakh. Similarly, for hotel stays, restaurant bills, or large event management services such as weddings, the limit has been doubled from ₹50,000 to ₹1 lakh.
Perquisites and Salary Benefits
The draft rules also update the valuation of tax-free perquisites to reflect modern economic realities. For salaried employees, the taxable value of company-provided cars and meals is set to rise:
- Free Meals: The perquisite value is proposed at ₹200 per meal.
- Company Cars: For cars with engine capacity below 1.6 litres, the allowance is fixed at ₹8,000 per month, while larger vehicles are set at ₹10,000 per month, inclusive of driver costs.
- HRA Expansion: The list of “Metro Cities” (Category 1) for HRA calculations is expanded to include Bengaluru, Pune, Ahmedabad, and Hyderabad, alongside the traditional four metros.
Crypto and Digital Currency Integration
Aligning with the government’s push for a digital economy, the draft rules officially recognise Central Bank Digital Currency (CBDC) as an accepted mode of electronic payment. Furthermore, crypto-asset service providers will now face stricter reporting and due-diligence obligations, with mandatory information sharing with the tax department expected to be fully operational by the 2027,28 exchange cycle.
The CBDT has invited public feedback on these draft rules until February 22, 2026, with the final notification expected by the first week of March.
