Early Times Report
NEW DELHI, Mar 15: The New Income Tax Act, 2025, effective April 1, 2026, replaces the 1961 Act. Key changes: PAN for high-value transactions, expanded HRA benefits, higher tax-free perquisites, etc.
The New Income Tax Act, 2025 is set to come into effect from April 1, 2026, replacing the decades-old Income-tax Act, 1961 with a simplified and more streamlined tax framework. The new legislation aims to make tax laws easier to understand by reducing complex provisions, eliminating redundant sections, and reorganising the structure of the law to improve clarity for taxpayers, professionals.
Under the draft rules, PAN will be required for annual cash deposits or withdrawals of Rs 10 lakh or more (aggregate in a financial year). Currently, a per-day limit of Rs 50,000 is applicable in deposits, while withdrawals have no specific provision.
PAN will be mandatory for vehicle purchases of Rs 5 lakh or more, including two-wheelers. Currently, PAN is needed for all vehicles, except for two-wheelers, irrespective of value.
For immovable property transactions, including gifts and JDAs, exceeding Rs 20 lakh, PAN must be quoted.
PAN will now be mandatory for all insurance premium payments, regardless of amount. Currently, PAN is required if the premium is above Rs 50,000 in a fiscal year.
However, PAN will be required for hotel/ event payments above Rs 1 lakh per transaction, against the current Rs 50,000.
This replaces the earlier fragmented daily or transaction-based limits and introduces a more annualised reporting structure.
2. Cash Deposits & Withdrawals: Annual Threshold Introduced
Currently, PAN is required for cash deposits exceeding Rs 50,000 in a day. The draft rules shift focus to an annual aggregate threshold of Rs 10 lakh for both deposits and withdrawals.
This could mean tighter tracking of cash-heavy transactions while reducing paperwork for smaller daily banking activities.
3. HRA Benefits Expanded to More Cities
In a major relief for urban salaried taxpayers, Bengaluru, Pune, Ahmedabad and Hyderabad have been proposed to be treated as metro cities for House Rent Allowance (HRA) purposes. |
