The government has proposed a major overhaul of the rules governing when quoting a Permanent Account Number (PAN) becomes mandatory for financial transactions. The changes, introduced through the draft Income-tax Rules under the Income-tax Act, 2025, significantly restructure compliance obligations for individuals and businesses engaging in high-value transactions.

The revised framework moves away from multiple fragmented transaction-based thresholds and introduces a more structured, annualised monitoring system aimed at strengthening financial transparency and widening the tax base.

PAN Mandatory For Annual Cash Transactions: Rs. 10 Lakh Threshold

One of the most significant changes relates to cash transactions. Under the draft rules, PAN will be mandatory if the aggregate cash deposits or withdrawals exceed ₹10 lakh in a financial year.

Unlike earlier provisions that triggered PAN requirements on a per-transaction basis, the new approach monitors cumulative annual activity. This shift signals increased scrutiny of large cash movements across the banking system.

PAN Mandatory For Vehicle Purchases: Lowered Threshold, Wider Coverage

The draft rules make PAN mandatory for the purchase of motor vehicles valued at ₹5 lakh or more.

Importantly, the scope now explicitly includes two-wheelers, broadening the compliance net beyond high-end cars. This change reflects the increasing value of premium motorcycles and electric vehicles in the market.

PAN Mandatory For Immovable Property Transaction Above Rs. 20 Lakhs

PAN must be quoted for property transactions exceeding ₹20 lakh.

The revised rules clarify that this requirement applies not only to outright sale transactions but also to:

• Gifts of immovable property
• Joint Development Agreements (JDAs)
• Transactions determined on the basis of stamp duty value

By expanding the definition, the draft rules aim to plug reporting gaps that previously allowed certain property arrangements to escape structured tax visibility.

Insurance Premiums: PAN Mandatory Regardless of Amount

A major compliance expansion is seen in insurance transactions. The draft rules mandate PAN for all insurance premium payments, irrespective of the amount.

This marks a clear departure from threshold-based requirements and indicates the tax administration’s intention to integrate insurance data more closely into financial profiling and risk assessment systems.

Hotels & Events: PAN Mandatory For Transaction Above Rs. 1 Lakh

For payments made to hotels, banquet halls, and event venues, PAN must now be furnished if the payment exceeds ₹1 lakh per transaction. The earlier threshold stood at ₹50,000.

While the threshold has been increased, the focus remains on capturing high-value discretionary expenditure within the reporting framework.

Shift to Annualised Monitoring

The overall structure of the draft rules reflects a policy shift toward:

• Annual aggregation of transactions
• Centralised reporting
• Greater data integration across sectors

The move aligns with the government’s broader strategy of leveraging financial data analytics to detect tax evasion, undisclosed income, and high-risk transactions.

Compliance Impact

Tax professionals note that the revised rules will:

• Increase compliance responsibilities for financial institutions, insurers, dealers, and property registrars
• Require stronger internal monitoring systems
• Encourage taxpayers to maintain greater documentation discipline

For individuals and businesses, the changes underscore the growing importance of PAN-linked transparency in financial dealings.

Once notified, these provisions are expected to significantly tighten reporting standards across multiple sectors and reinforce the government’s push toward a data-driven tax administration framework.