Draft Income Tax Rules 2026: What are the Major Changes?

The Draft Income Tax Rules, 2026, were recently released by the Income Tax Department, which aims to align with the Income Tax Act, 2025, which is coming into effect from April 1, 2026.

Reports say that the draft will be notified by March 2026, replacing the Income Tax Rules, 1962. Let us take a look at the proposals made under the Draft Income Tax Rules, 2026:

• PAN will be mandatorily required for the annual cash deposits or withdrawal of amounts more than Rs 10 lakh.
• PAN will no longer be required for hotel bills less than Rs 1 lakh.
• If you buy a vehicle or motorcycle worth more than Rs 5 lakh, you will need to provide your PAN.
• For buying property worth over Rs 20 lakh, quoting PAN is compulsory.
• PAN is also required when you open or maintain accounts with insurance companies.
• The number of rules was cut down to 333 from 511, and the number of forms was reduced to 190 from 399.
• CBDC (Central Bank Digital Currency) is officially accepted as a valid electronic payment method.
• Increased tax-free value for some perquisites like free meals, official vehicles, etc. If an employer provides free food or non-alcoholic drinks, the tax-free value is set at Rs 200 per meal.
• Crypto exchanges must share transaction details with the tax department.
• The 50% HRA exemption will now be provided in Bengaluru, Pune, Ahmedabad, and Hyderabad.
• If an employer provides a motor car, the monthly perquisite value will be Rs 8,000 for cars with an engine capacity of less than 1.6 litres and Rs 10,000 for higher-capacity cars (including driver costs).