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  5. Cash transactions of ₹20 lakh or more: Who’s required to quote PAN and who’s exempt in draft rules

Personal Finance News

Cash transactions of ₹20 lakh or more: Who’s required to quote PAN and who’s exempt in draft rules

sangeeta-ojha.webp
By Sangeeta Ojha

3 min read | Updated on February 20, 2026, 15:47 IST

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SUMMARY

A person must quote their PAN when entering into certain transactions. These include cash deposits of ₹20 lakh or more in a financial year, cash withdrawals of ₹20 lakh or more in a financial year, and opening a current or cash credit account.

post office small savings 80c tax

A person must quote their PAN when entering into certain transactions. These include cash deposits of ₹20 lakh or more in a financial year, cash withdrawals of ₹20 lakh or more in a financial year, and opening a current or cash credit account. | Image: Sh

Rule 161 of the Draft Income Tax Rules, 2026 ensures that certain high-value financial transactions are linked to a Permanent Account Number or PAN, which helps the government track financial activity for tax purposes and prevents tax evasion.

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When PAN must be quoted

A person must quote their PAN when entering into certain transactions. These include cash deposits of ₹20 lakh or more in a financial year, cash withdrawals of ₹20 lakh or more in a financial year, and opening a current or cash credit account. The responsibility to verify the PAN rests with banks, cooperative banks under the Banking Regulation Act, and post offices (through the Post Master General).
Sl. No.TransactionPerson Responsible for Verification
1Cash deposit of ₹20 lakh or more in a financial year in one or more accountsBanks/Co‑operative banks under the Banking Regulation Act, Post Office (Post Master General)
2Cash withdrawal of ₹20 lakh or more in a financial year in one or more accountsBanks/Co‑operative banks under the Banking Regulation Act, Post Office (Post Master General)
3Opening a current account or cash credit accountBanks/Co‑operative banks under the Banking Regulation Act, Post Office (Post Master General)
( Source: Draft Income Tax Rules 2026)

Exceptions to quoting PAN

The rule does not apply in certain cases:

  • If the person making the transaction is the Central Government, State Government, or a Consular Office.

  • If the person is a non-resident individual (not a company) or a foreign company, and the transaction is through an IFSC (International Financial Services Centre) banking unit, and they do not have any income taxable in India.

"The provisions of sub-rule (1) shall not apply in a case where the person carrying out transaction... is the Central Government, the State Government or the Consular Office," the draft rules say.

"The provisions of sub-rule (1) shall not apply in a case,-(a) where the person, carrying out transaction ...is a non-resident (not being a company) or a foreign company;(b) the transaction is entered into with an IFSC banking unit; and (c)such non-resident (not being a company) or the foreign company does not have any income chargeable to tax in India," the draft tax rules note.

Let's try to undersatnd this with an example. Mr. Ajay Sharma deposits ₹30 lakh in his bank account in a financial year. He must quote PAN. The bank must check and authenticate PAN.

A foreign company with no taxable income in India deposits ₹60 lakh in an IFSC account. No PAN required under the exceptions.

Authentication of PAN

The PAN submitted must be authenticated. This authentication is done by the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems).

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About The Author

sangeeta-ojha.webp
Sangeeta Ojha is a business and finance journalist with vast experience across leading media platforms, including Mint and India Today. Passionate about personal finance, she has built a reputation for covering a wide range of PF topics—from income tax and mutual funds to insurance, savings, and investing.

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