New Income Tax Rules 2026: PAN Hikes, Crypto & CBDC Overhaul

New Delhi, February 10, 2026: In a significant overhaul of India’s direct tax landscape, the Central Board of Direct Taxes (CBDT) has released the Draft Income-tax Rules, 2026. Designed to operationalize the new Income-tax Act, 2025, these rules introduce sweeping changes aimed at modernizing tax administration, easing the compliance burden for honest taxpayers, and bringing digital assets firmly into the regulatory net.

The proposed rules are currently open for public feedback until February 22, 2026, with a planned implementation date of April 1, 2026.

1. Major Hikes in PAN Quoting Thresholds

To reduce “compliance friction” for everyday transactions, the government has proposed a substantial increase in the monetary limits that trigger the mandatory quoting of a Permanent Account Number (PAN).

Transaction Category	Current Threshold	Proposed Threshold (2026 Rules)
Cash Deposits/Withdrawals	₹50,000 (per day)	₹10 Lakh (aggregate per financial year)
Immovable Property	₹10 Lakh	₹20 Lakh
Motor Vehicles	All (except 2-wheelers)	Above ₹5 Lakh (includes 2-wheelers)
Hotel/Restaurant Bills	₹50,000	₹1 Lakh

Key Takeaway: The shift for bank transactions from a “per day” limit to an “annual aggregate” limit is intended to provide more flexibility to small businesses and individuals while allowing the tax department to focus on high-value cash hoarders.

2. Crypto Reporting and Strict Penalties

The 2026 rules signal a “compliance-first” era for Virtual Digital Assets (VDAs). While the tax rate remains at 30%, the reporting framework for crypto exchanges and service providers has been significantly tightened.

• Reporting Obligations: Crypto-asset service providers must now adhere to rigorous due diligence and reporting standards. Detailed transaction data sharing with the tax department is expected to commence in full by 2027.
• Two-Tier Penalty System: To ensure accountability, a new penalty framework has been introduced:
  • ₹200 per day for failure to submit required transaction statements.
  • ₹50,000 fixed penalty for filing incorrect or misleading information.
• VDA Schedule: Taxpayers must continue to report all digital asset gains under the dedicated Schedule VDA in their returns, with no provision to offset losses against other income.

3. Integrating the Digital Rupee (CBDC)

In a major step toward normalizing sovereign digital currency, the draft rules formally include the Central Bank Digital Currency (CBDC) as an accepted mode of electronic payment.

By categorizing CBDC alongside traditional banking channels and UPI, the government is providing a regulatory foundation for the “Digital Rupee” to be used in tax-deductible business expenses and official financial transactions. Unlike private cryptocurrencies, CBDC is treated as a digital form of fiat currency, exempting it from the specific 30% VDA tax.

4. Simplification: Slashing Forms and Rules

The overarching goal of the 2026 overhaul is to make the tax system “leaner and smarter.” The CBDT has achieved this through a massive rationalization exercise:

• Rule Reduction: The number of tax rules has been cut from 511 to 333.
• Form Consolidation: Total income tax forms have been slashed from 399 to just 190.
• Smart Forms: The new “system-driven” forms will feature pre-filled data, automated reconciliation, and simplified language to reduce the risk of litigation and manual errors.

5. Better Perks for Employees

The draft rules also reflect current economic realities by updating the valuation of employee perquisites:

• Meal Allowances: The tax-exempt value for free meals provided by employers has been increased to ₹200 per meal, up from the long-standing ₹50 limit.
• Company Cars: Allowances for employer-provided vehicles have been rationalized, with limits set at ₹8,000–₹10,000 per month depending on engine capacity.