New Delhi, May 1, 2026 — Starting April 1, 2026, a major shift in India’s tax compliance landscape has come into effect under the new Income Tax Rules, 2026. Individuals without a Permanent Account Number (PAN) can no longer rely on declarations like the old Form 60 for many high-value purchases and financial transactions. The replacement form, Form 97, has a significantly restricted scope, effectively making PAN compulsory in numerous cases.
This change aims to strengthen tax tracking, curb evasion, and integrate more economic activities into the formal system. Sellers and service providers are now required to collect and report PAN details for specified transactions, with non-compliance potentially leading to penalties or blocked deals.
Why Form 97 Cannot Replace PAN in Most Cases
Form 97 replaces the earlier Form 60 as a declaration for individuals (excluding companies and firms) who do not possess a PAN. It requires the declarant to confirm that their estimated total income is below the taxable threshold or that they qualify as a foreign entity with no taxable income in India. However, under Rule 159 of the new rules, Form 97 is permitted only for a limited set of transactions. For most high-value activities, quoting a PAN is now non-negotiable.
Transactions Where PAN Is Mandatory
The following high-value transactions now strictly require a PAN:
- Goods and Services Purchases: Any sale or purchase of goods or services exceeding ₹2 lakh per transaction, including gold jewellery or bullion.
- Motor Vehicles: Purchase of cars, SUVs, or certain vehicles priced above ₹5 lakh (premium two-wheelers may also fall under this; tractors are generally exempt).
- Investments and Securities:
- Mutual funds, debentures, or RBI bonds above ₹50,000.
- Other securities (excluding shares) above ₹1 lakh.
- Demat and Financial Accounts: Opening demat accounts or applying for credit/debit cards in many cases.
- Foreign Currency and Banking Transactions: Several high-value banking and forex dealings where Form 97 is no longer accepted.
For immovable property, the rules offer slight flexibility: PAN is mandatory for transactions above ₹45 lakh. Form 97 may still be used for property deals valued between ₹20 lakh and ₹45 lakh, reflecting an increased threshold in some segments.
Broader Context of PAN Reforms
These updates align with other adjustments in the 2026 rules, such as shifting certain cash deposit/withdrawal monitoring to annual aggregates (e.g., ₹10 lakh in a financial year in specified cases) rather than rigid daily limits. The overarching goal is better data matching and compliance without overburdening smaller transactions.
Tax experts note that these measures will push more individuals to obtain a PAN, especially those involved in occasional high-value spending or investments. Failure to provide PAN where required could result in transaction denial, higher TDS deductions, or reporting issues for the seller.
What Should You Do?
If you frequently engage in the above transactions but lack a PAN, apply for one immediately through the Income Tax e-filing portal or authorized agencies. It is a straightforward process and links to Aadhaar for most residents.
While Form 97 provides limited relief for low-income individuals in exempted categories, the message from the new framework is clear: For significant financial activities, PAN is now essential.
As implementation rolls out, taxpayers are advised to stay updated via official CBDT notifications, as banks, dealers, and registrars begin enforcing these requirements at the ground level. This represents another step toward a more transparent and digitized tax ecosystem in India.
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