New Income Tax Act Eases Rules: PAN Not Needed for Vehicles Under ₹5 Lakh

New Income Tax Act: A draft of the new Income Tax laws has been published. Motor vehicle transactions worth less than ₹5 lakh do not require a Permanent Account Number (PAN). Anyone purchasing or selling a vehicle or motorcycle valued less than ₹5 lakh will not need to furnish their PAN. Currently, a PAN is required when buying or selling a vehicle. If the vehicle’s value is less ₹4 lakh, the PAN number is required.

For what transactions would a PAN be required?

The Income Tax Department has requested feedback on the proposed income tax rules by February 22nd. Draft Rule 159 specifies the categories of financial and high-value transactions that will require a PAN. This rule stipulates that PAN must be presented when opening a bank or demat account, applying for a credit card, depositing or withdrawing substantial quantities of cash, acquiring mutual fund units, bonds, or stocks, purchasing high-value motor vehicles, or purchasing real estate. PAN must also be presented when paying a hefty hotel bill or attending an event. Rule 150 is intended to track major financial transactions, improve tax compliance, and combat tax evasion.

If the transaction value reaches a specific level, you must submit your PAN.

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The new law requires individuals to disclose their PAN when depositing or withdrawing ₹10 lakh or more in cash from one or more bank accounts in a financial year. Currently, PAN is required for deposits over ₹50,000 in a bank account in a single day. PAN is required for hotel, restaurant, convention center, or banquet hall bills above ₹1 lakh. Currently, PAN is required for hotel or restaurant bills above ₹50,000.

New Income Tax Act

The new Income Tax Act goes into effect on April 1, 2026. The Income Tax Department has issued draft regulations for this Act. It imposes restrictions on the mandatory use of PAN for many financial operations.

New Income Tax Rules to Come into Effect on April 1

Finance Minister Nirmala Sitharaman declared in the Union Budget on February 1 that the Income Tax Act of 2025 will take effect on April 1 of this year. This Act will supersede the Income Tax Act of 1961. The number of rules in the new Income Tax Act has decreased. An attempt was made to simplify the language of the rules. The new regulations are simple enough for anyone to understand, eliminating the need for a tax professional. The Income Tax Act of 1961’s terminology is difficult for taxpayers to understand.