The Government of India has introduced the new Income Tax Act 2025. The new act aims to simplify the existing Income Tax Act.
The draft rules of the New Income Tax Act, 2025 propose several changes to PAN card requirements. The aim is to reduce paperwork for small transactions. These rules are expected to be implemented from April 1, 2026.
Under the proposed rules, PAN will be required only if cash deposits or withdrawals exceed ₹10 lakh in a financial year. At present, PAN is required for cash deposits above ₹50,000 in a single day at banks or cooperative banks. This change is expected to benefit small businesses and individual taxpayers.
The PAN requirement for hotel bills has been increased from ₹50,000 to ₹1 lakh. Bills below ₹1 lakh will not require PAN. The same limit will apply to payments made at convention centres and event management companies.
For property transactions and gifts, the proposal increases the PAN limit from ₹10 lakh to ₹20 lakh.
PAN will now be required for the purchase of two-wheelers or motor vehicles priced above ₹5 lakh. Earlier, PAN was mandatory for all four-wheelers, while two-wheelers were exempt, regardless of price.
PAN will also become mandatory to open an account-based relationship with insurance companies. Earlier, PAN was required only if life insurance premiums exceeded ₹50,000. Under the new system, every policy purchase will involve creating a permanent customer account.
Crypto exchanges will have to share transaction details with the Income Tax Department. Digital currencies have also been officially recognised as a mode of electronic payment under the proposed rules.
After the Budget 2026 announcement, the CBDT invited public feedback on the draft rules. After reviewing suggestions, the final rules are expected by early March. The new rules will be implemented across the country from April 1, 2026.
In another update, Taxpayers will soon be able to apply for nil or lower Tax Deducted at Source (TDS) on property and other transactions through a new application format introduced under the Income Tax Act, 2025.
The updated system introduces Form 128, which taxpayers can use to request a certificate allowing TDS to be deducted at a reduced rate or not deducted at all for a specified period.
This can be particularly useful in situations where the taxpayer’s actual tax liability is lower than the TDS amount that would normally be deducted, such as during the sale of property.
For example, a property seller expecting to complete a transaction between April and October can apply in advance using the new form to obtain a lower TDS certificate from the Income Tax Department. Once issued, the certificate allows the buyer or payer to deduct tax at the approved rate instead of the standard rate.
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