10 changes in draft Income-tax Rules 2026

The draft Income-tax Rules, 2026, propose sweeping changes, ranging from simplified, smart pre-filled forms to new limits on PAN quoting for transactions such as payment of hotel bills and purchase of insurance.

As per a PTI report, after incorporating public comments, the draft rules will be notified by the first week of March and will replace the Income Tax Rules, 1962.

This article takes a closer look at the draft Income Tax Rules, 2026, which are expected to be notified before the April 1 rollout.

The following are the salient features of the draft Income Tax Rules, 2026:

1. Number of rules reduced to 333 from 511; forms cut to 190 from 399.

2. PAN mandatory for annual cash deposits or withdrawals exceeding ₹10 lakh.

3. No requirement to quote PAN for hotel bills below ₹1 lakh.

4. ₹5 lakh threshold for quoting PAN on purchase of vehicles and motorcycles.

5. For immovable property, quoting PAN is mandatory if the price exceeds ₹20 lakh.

6. PAN compulsory for account-based relationships with insurance companies.

7. Tax-free value of certain perquisites, such as official vehicles and free meals, increased.

8. Bengaluru, Pune, Ahmedabad, and Hyderabad added to the list of metro cities for HRA purposes.

9. Crypto exchanges are required to share information with the tax department.

10. Central Bank Digital Currency (CBDC) is recognised as an accepted mode of electronic payment.

The draft also proposes an upward revision in the tax-free value of certain perquisites. The perquisite value of free food and non-alcoholic beverages provided by employers has been fixed at ₹200 per meal.

For employer-provided motor cars, the monthly perquisite value will be ₹8,000 for vehicles with engine capacity below 1.6 litres and ₹10,000 for higher-capacity vehicles, inclusive of driver costs.

The draft further suggests higher valuation norms for certain employer-provided perquisites, mandates information-sharing by crypto exchanges with the tax department, and recognises Central Bank Digital Currency (CBDC) as an accepted mode of electronic payment.