New Delhi: Draft Income Tax Rules have proposed significantly raising transaction limits for quoting of PAN for cash deposits/withdrawal in banks, purchase of motor vehicles and property, and payment of hotel bills.
The draft also proposes raising the value of perquisites provided by employers, and making it mandatory for crypto exchanges to share information with the tax department. It also includes Central Bank Digital Currency (CBDC) as an accepted mode of electronic payment.
The draft rules have expanded the list of Category 1 metropolitan cities to include Bengaluru, Pune, Ahmedabad, and Hyderabad for the purpose of claiming house rent allowance (HRA). The list includes Delhi, Mumbai, Kolkata, and Chennai.
The Central Board of Direct Taxes (CBDT) will finalise rules after stakeholder consultation and will notify them by the first week of March, Finance Ministry sources said.
The Income Tax Rules are being finalised to give effect to the Income Tax Act, 2025, which will be implemented from April 1.
According to the proposed Income Tax Rule, 2026, quoting of Permanent Account Number (PAN) will be mandatory for making cash deposits or withdrawals aggregating to Rs 10 lakh or more in a financial year, in one or more accounts of a person.
Presently, PAN is required for cash deposits exceeding Rs 50,000 during any one day with a banking company or a cooperative bank.
In case of purchase of motor vehicles (including motor cycles), a buyer has to quote his/her PAN if the price exceeds Rs 5 lakh.
The current Income Tax Rules, 1962, do not provide for quoting of PAN for purchase of two-wheelers, while for motor vehicles it was mandatory irrespective of price.
In case of hotel/restaurant bills, payments made to convention centres or banquet halls or a person engaged in event management, PAN will be mandatory if the payment exceeds Rs 1 lakh.
The current I-T Rules specify a Rs 50,000 threshold for quoting PAN in case of hotel/restaurant bills.
In case of purchase or sale or gift or joint development agreement of any immovable property, PAN will be mandatory if the transaction cost is more than Rs 20 lakh, as against the existing limit of Rs 10 lakh.
Under the draft rules, PAN will be mandatory for starting an account-based relationship with an insurance company. Currently, payments aggregating to more than Rs 50,000 in a financial year as life insurance premium require PAN.
Sources said the intent behind rationalising the PAN quoting threshold is to capture only “relevant information” and “leveraging tech-enhancements of reporting entities” under the Income Tax Act.
The value of tax-free perquisites for official vehicles and free meals is proposed to be enhanced in view of the current market realities.
In case of free food and non-alcoholic beverages provided by the employer to an employee, the perquisite value has been fixed at Rs 200 per meal.
For motor cars, the allowance of cars below the engine capacity of 1.6 litres will be Rs 8,000/month, while for others it will be Rs 10,000/month. These would include allowance for drivers.
The draft rules also propose detailed reporting and due-diligence obligations for crypto-asset service providers.
PTI