In an effort to make compliance easier for everyday taxpayers, the Income Tax Department has suggested new rules. These rules would allow cash deposits and withdrawals of up to ₹10 lakh per financial year without requiring a PAN quote.
Currently, any cash deposit over ₹50,000 in a single day requires a PAN. Many people found this a hassle for everyday banking. However, the draft rules show a change in strategy.
Cash deposit: What do the tax draft rules say?
Under Rule 159 of the Draft Income Tax Rules 2026, the government states, “Every person shall quote his Permanent Account Number in all documents related to the transactions specified… Cash deposits totaling ₹10 lakh or more in a financial year, in one or more accounts of a person.”
Cash withdrawal: What do the tax draft rules say?
The same limit applies to withdrawals: “Withdrawal with a banking company or a co-operative bank… or Post Office shall require PAN where total withdrawals reach ₹10 lakh or more in a financial year.”
This means that everyday cash activity below ₹10 lakh a year will no longer require PAN reporting. Experts say this provides relief from the previous daily limits while giving the tax department clearer insight into high-value cash movements.
In simple terms, if your total cash transactions in a year stay under ₹10 lakh, banks may not ask for PAN details. This cuts down on paperwork and makes banking easier for those who handle cash for valid reasons. However, if the amount exceeds ₹10 lakh, PAN will still be needed, and large transactions will continue to be monitored. Abhishek Soni, CEO and Co-founder of Tax2win, noted that while this offers some procedural relief, it does not eliminate tax compliance for high-value transactions.
“Previously, PAN requirements applied at lower transaction amounts. These lower limits often led to excessive reporting, even for basic personal or business transactions; this increased documentation without necessarily improving tax oversight. The revised limits aim to streamline this by focusing on total or higher-value transactions that better indicate significant economic activity,” said Aditya Bhattacharya, Partner at King Stubb & Kasiva, Advocates and Attorneys.
From a taxpayer’s viewpoint, the immediate effect is less need for paperwork in day-to-day transactions. Small and mid-sized purchases that used to require PAN details may now fall outside the reporting obligations, adding convenience, especially for individuals and small businesses.
“Taxpayers should still be careful and proactive. The new thresholds do not lessen the need to keep accurate records or comply with other requirements like TDS, TCS, or reporting under specified financial transactions. It is also vital to ensure that PAN remains valid and active, including Aadhaar linkage, as failing to comply can lead to broader tax issues,” said Aditya Bhattacharya.
The rules are set to take effect on April 1, 2026, giving ordinary taxpayers more flexibility in cash transactions.
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