New tax rules may change how you deposit cash, pay bills, claim HRA
Your taxes, your transactions: Draft rules propose big changes
 "New tax rules may change how you deposit cash, pay bills, claim HRA")
If you frequently deal in cash transactions, buy property or vehicles, or claim house rent allowance (HRA), the proposed Income Tax Rules, 2026 could change some of the compliance requirements for you from April this year.
The Central Board of Direct Taxes (CBDT) has proposed several updates to PAN-quoting thresholds, employee benefits valuation, and reporting rules as part of the transition to the Income Tax Act, 2025, which is scheduled to take effect on April 1.
The rules will be finalised after stakeholder consultation.
PAN rules for bank transactions may change
One of the biggest proposed changes relates to cash deposits and withdrawals.
Under the draft rules:
PAN will be required for cash deposits or withdrawals totalling ₹10 lakh or more in a financial year across one or more bank accounts.
Currently, PAN is required only for cash deposits above ₹50,000 in a single day with a bank or cooperative bank.
For most salaried taxpayers, this means fewer PAN-related compliance triggers for routine banking transactions, while still tracking large-value activity.
PAN requirement for purchases and payments
The draft rules also revise PAN-quoting requirements across several transactions:
Motor vehicle purchases: PAN required if value exceeds ₹5 lakh, including two-wheelers.
Hotel, banquet or event payments: PAN required for payments above ₹1 lakh (earlier ₹50,000).
Property transactions: PAN required for transactions above ₹20 lakh (earlier ₹10 lakh).
Insurance relationships: PAN required when starting an account-based relationship with an insurer.
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.
HRA rules expand to more cities
For salaried employees claiming house rent allowance (HRA), the draft rules expand the list of Category-1 metro cities.
In addition to Delhi, Mumbai, Kolkata and Chennai, the list may now include:
- Bengaluru
- Pune
- Ahmedabad
- Hyderabad
This could affect how HRA exemptions are calculated for employees living in these cities.
Changes in employee perquisites
The draft rules also propose updates to the valuation of certain tax-free perquisites provided by employers.
For example:
Free meals provided by employers may be valued at ₹200 per meal.
Company car allowances may be valued at ₹8,000 per month for smaller cars and ₹10,000 per month for larger vehicles, including driver costs.
These revisions reflect current market costs and inflation, aligning tax rules with real-world expenses.
Crypto reporting and digital payments
The draft rules propose mandatory reporting obligations for crypto exchanges, requiring them to share transaction information with the tax department.
The rules also recognise Central Bank Digital Currency (CBDC) as an accepted mode of electronic payment, signalling the growing role of digital money in India’s financial system.
What taxpayers should expect
The proposed changes are part of the government’s broader effort to simplify compliance and modernise tax administration under the new tax law framework.
For most taxpayers, the changes mean:
- fewer PAN requirements for smaller transactions
- clearer rules for employee benefits
- expanded HRA classification for major cities
- tighter reporting for digital assets
The final rules are expected to be notified by early March, ahead of the new tax regime’s rollout in April. With inputs from PTI