Draft Income Tax Rules 2026: PAN no more compulsory for hotel bills below Rs. 1 lakh

• 13 Feb 2026
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Last week, the Government of India released a document on the draft Income Tax Rules. In this document, several key changes pertaining to the new Income Tax Rules 2026 were proposed by the Centre. The changes will be implemented under the Income Tax Act 2025, which will become effective from 1 April this year. 

Among the proposed changes, the government plans to substantially increase the monetary thresholds for quoting a PAN when purchasing motor vehicles, making cash withdrawals or deposits from banks, acquiring property and settling hotel bills. 

Moreover, the draft suggests raising the value of perquisites provided by employers and making it mandatory for cryptocurrency exchanges to share information with the income tax department. It also recognizes Central Bank Digital Currency (CBDC) as an accepted mode of electronic payment. 

Shortly after Finance Minister Nirmala Sitharaman's announcement regarding Budget 2026, the Central Board of Direct Taxes (CBDT) released the draft rules and forms for public comment related to the new Income Tax Act of 2025.

Rules Updated for Quoting PAN

In the new income tax rules, it is specified where quoting PAN will be a mandatory requirement. As per the proposed Income Tax Rule 2026, it’ll be mandatory to quote PAN for making cash deposits/withdrawals aggregating to Rs. 10 lakhs or more in a financial year in one or more accounts of an individual. 

Currently, quoting PAN is compulsory for cash deposits exceeding Rs. 50,000 on any one day with a banking company/cooperative bank. Similar to this, the monetary threshold for quoting PAN while purchasing a motor vehicle has also been updated. Buyers who purchase motor vehicles, incl. motor cycles, have to quote their PAN if the price exceeds Rs. 5 lakhs.

Under the prevailing rules, there isn’t any provision for quoting PAN for buying two wheelers. Quoting of PAN is mandatory regardless of price for the motor vehicles. The hospitality sector will also be affected by the PAN requirement. 

In case of hotel or restaurant bills, payments made to convention centres or banquet halls or to a person engaged in event management, PAN will be mandatory if the payment is more than Rs. 1 lakh. As per the prevailing IT Rules, Rs. 50,000 threshold for quoting PAN on hotel or restaurant bills is specified.

Under the new IT rules 2026, to start an account based relationship with an insurance company, PAN will be a mandatory requirement. At present, PAN is required for payments that exceed Rs. 50,000 in a financial year, including life insurance premiums. 

When Will New Income Tax Act 2025 Come into Force?

The New Income Tax Act 2025 is set to come into force from 1 April 2026 after finalization of the new Income Tax Rules. After stakeholder consultation, the CBDT will finalize the rules and notify them by March’s first week, according to a PTI report.

Source: Live Mint