For the Financial Year 2026–27 (Assessment Year 2027–28), the New Income Tax Act, 2025, along with the Draft Income Tax Rules, 2026, introduces several important updates to the limits governing banking and cash transactions across the world.
These revised rules are designed to simplify compliance for regular financial activities while also strengthening monitoring of high-value transactions.
Key Limits and Reporting Thresholds
Below are the major limits and reporting thresholds effective from April 1, 2026:
Updated PAN Quoting Thresholds under Draft Rules 2026
The government has proposed revised monetary thresholds where PAN details are mandatory for various financial and banking transactions:
- Cash Deposits or Withdrawals:
PAN is required if the total cash deposit or withdrawal exceeds ₹10 Lakh across all accounts in a financial year.
(Earlier, this was based on a single-day limit of ₹50,000.) - Property Transactions:
The threshold has been increased to ₹20 Lakh, compared to the earlier ₹10 Lakh. - Vehicle Purchases:
PAN is now compulsory for purchasing any vehicle, including two-wheelers, if the value exceeds ₹5 Lakh.
(Earlier, two-wheelers were not included.) - Hotel, Travel, and Event Payments:
PAN is required if the payment exceeds ₹1 Lakh, up from the earlier ₹50,000 limit.
SFT Reporting Limits: Bank to Tax Authority Communication
Banks are required to report high-value transactions to tax authorities through the Statement of Financial Transactions (SFT).
These details will also appear in the taxpayer’s Annual Information Statement (AIS).
Updated Reporting Thresholds (Per Financial Year):
- Savings Account Deposits:
Aggregate deposits of ₹10 Lakh or more - Current Account Transactions:
Total deposits or withdrawals of ₹50 Lakh or more - Fixed Deposits (FDs):
Total value of ₹10 Lakh or more - Credit Card Payments (Cash):
Cash payments of ₹1 Lakh or more - Credit Card Payments (Digital):
Digital payments of ₹10 Lakh or more - Investments (Mutual Funds/Stocks):
Investments totaling ₹10 Lakh or more
TDS on Cash Withdrawals under Section 194N
Tax Deducted at Source (TDS) applies on cash withdrawals when they exceed specific yearly limits:
For Regular Tax Filers:
- 2% TDS on withdrawals exceeding ₹1 Crore
For Non-Filers (Last 3 Years):
- 2% TDS on withdrawals exceeding ₹20 Lakh
- 5% TDS on withdrawals exceeding ₹1 Crore
General Cash Transaction Restrictions (Sections 269ST & 269SS)
Strict rules are in place to limit large cash transactions:
- Cash Receipt Limit (Section 269ST):
No person can receive ₹2 Lakh or more in cash:- From a single person in one day
- For a single transaction
- For transactions related to one event
- Loans and Deposits (Section 269SS):
Accepting or repaying ₹20,000 or more in cash is prohibited. - Business Expenses Rule:
Any expense paid in cash exceeding ₹10,000 in a day to one person will not be allowed as a deduction.
Digital Transaction Limits (UPI)
There is no direct tax limit on digital payments, but operational caps exist:
- Standard UPI Limit:
Maximum ₹1 Lakh per transaction - Higher Limits for Specific Categories:
Up to ₹5 Lakh or ₹10 Lakh allowed for:- Hospitals
- Educational Institutions
- IPO Applications
- Government Investment Schemes
Important Note
Although the Draft Rules 2026 aim to make compliance easier—such as removing the strict ₹50,000 daily PAN trigger—tax authorities continue to closely track high-value financial activities through SFT reporting.
It is important to ensure that all major transactions are consistent with your declared income to avoid notices or scrutiny.