Starting April 1, 2026, significant reforms to the Permanent Account Number (PAN) system will be enacted under the new Income Tax Act, 2025. These changes are designed to enhance financial transparency and compliance across various sectors in India.
The new act replaces the previous Income Tax Act, which had been in place for over six decades. Among the most notable changes is the introduction of two-factor authentication for all digital payment transactions, a move aimed at bolstering security in financial dealings.
In a shift from previous regulations, Aadhaar alone will no longer suffice for obtaining a PAN card; applicants will need to provide additional documentation. Furthermore, the name on the PAN card must now match the details on the Aadhaar card, ensuring a tighter linkage between identity and financial transactions.
Individuals applying for a PAN will need to use specific forms: Form 93 for personal applications, Form 94 for companies, Form 95 for foreign individuals, and Form 96 for foreign entities. This structured approach is expected to streamline the application process.
Financial transactions will also see new thresholds for PAN requirements. For instance, PAN will only be required for banking transactions when total deposits or withdrawals exceed Rs 10 lakh in a financial year, and for vehicle purchases when the value exceeds Rs 5 lakh. Additionally, PAN will be mandatory for all insurance policies, irrespective of the premium amount, which now includes policies with annual premiums as low as Rs 50,000.
In property transactions, the threshold for mandatory PAN disclosure has been raised from Rs 10 lakh to Rs 20 lakh. For high-value expenditures at hotels, restaurants, or events, PAN will only be necessary when the bill exceeds Rs 1 lakh.
These reforms are part of a broader strategy to strengthen compliance and improve transparency in financial transactions. As Rohit Mahajan noted, “These changes aim to streamline tracking of financial activities and strengthen the linkage between individuals and their transactions.”
Looking ahead, the Junior Pan American Cups 2026 will take place in Santiago, Chile, from April 6-18, 2026, coinciding with the implementation of these reforms. Meanwhile, observers are keen to see how these changes will impact financial behavior and compliance across the country.
Details remain unconfirmed regarding the full implications of these reforms, but the anticipated changes are expected to reshape the landscape of financial transactions in India.
