The Indian tax landscape is undergoing its most significant transformation in decades. Following the introduction of the Income-Tax Act, 2025, the government has released the Draft Income-Tax Rules, 2026. Designed to replace the aging 1962 framework, these rules aim to simplify compliance while “capturing the right information” to widen the tax base.
With an implementation date of April 1, 2026, these changes will affect how you buy cars, invest in fixed deposits, and even pay for hotel stays. Here is a breakdown of what these draft rules mean for the average taxpayer.
Table of Contents
- Reporting High-Value Fixed Deposits
- New PAN Mandates: What’s Changing?
- Changes in Property and Luxury Spending
- Digital Currency and Perquisites
- Timeline for Implementation
Reporting High-Value Fixed
One of the most talked-about sections of the draft rules involves Statement of Financial Transactions (SFT). Banks and post offices are required to report high-value transactions to the Income-Tax Department.
What stays the same?
The threshold for reporting new fixed deposits (FDs) remains at ₹10 lakh or more in a financial year. Just like the current rules, FD renewals are excluded from this reporting requirement to avoid double-counting.
What is changing for cash?
The draft rules introduce a tiered approach for cash deposits into FD accounts based on PAN availability:
- PAN Holders: Reporting is mandatory for cash deposits aggregating to 10 lakh or more.
- Non-PAN Holders: A stricter limit of 5 lakh applies.
New PAN Mandates: What’s Changing?
The government is significantly hiking the monetary thresholds for quoting a Permanent Account Number (PAN). This move is intended to reduce the compliance burden on small-scale transactions while focusing on high-value movement.
| Transaction Type | Current PAN Threshold | Proposed 2026 Threshold |
| Cash Deposit/Withdrawal | Over ₹50,000 (single day) | ₹10 Lakh (aggregate per year) |
| Purchase of Motor Vehicle | All vehicles (except 2-wheelers) | Above ₹5 Lakh (includes 2-wheelers) |
| Hotel/Restaurant Bills | Above ₹50,000 | Above ₹1 Lakh |
| Immovable Property | Above ₹10 Lakh | Above ₹20 Lakh |
| Life Insurance Premium | Above ₹50,000 | Mandatory for all account-based starts |
Changes in Property and Luxury Spending
The real estate and hospitality sectors will see a notable shift in how transactions are documented.
Real Estate
Currently, any sale, purchase, or gift of immovable property worth 10 lakh requires a PAN. The draft rules propose doubling this limit to 20 lakh. This change reflects rising property valuations and aims to exclude smaller rural or semi-urban transactions from rigorous documentation.
Hospitality and Events
If you are planning a grand wedding or a corporate event, take note. The threshold for quoting a PAN for hotel bills, convention centers, or event management services is set to increase from ₹50,000 to ₹1 lakh.
Buying a Vehicle
Interestingly, the rules for motorcycles are getting stricter. Currently, you don’t need a PAN for a two-wheeler regardless of price. Under the 2026 rules, any motor vehicle—including motorcycles—priced above 5 lakh will require a PAN.
Digital Currency and
The 2026 rules are catching up with modern technology. For the first time, Central Bank Digital Currency (CBDC) is explicitly recognized as an accepted mode of electronic payment. Furthermore, crypto exchanges will now be legally compelled to share transaction information directly with the tax department.
Employers should also prepare for changes in how perquisites (non-monetary benefits provided to employees) are valued, as the draft suggests a hike in these valuations, which could impact the taxable income of salaried individuals.
Timeline for Implementation
The New Income Tax Act, 2025 and its corresponding rules are not yet set in stone. The Central Board of Direct Taxes (CBDT) has invited public feedback to ensure the final version is user-friendly.
- Public Feedback: Currently open.
- Final Notification: Expected by the first week of March 2026.
- Effective Date: April 1, 2026.
The overarching goal is to transition into a system of pre-filled tax forms. By capturing accurate data at the source, the department hopes to make filing returns a “one-click” experience for most citizens, removing the need for complex manual entries and cross-verification.
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