Rule 161 of the Draft Income-tax Rules, 2026 specifies transactions for the purposes of section 262(9)(a) where quoting of Permanent Account Number (PAN) is compulsory. Every person must quote PAN at the time of entering into certain high-value banking transactions, and the receiving institution must ensure that the PAN is duly quoted and authenticated. The rule applies to cash deposits aggregating to ₹20 lakh or more in a financial year in one or more accounts with a banking company, co-operative bank, or post office; cash withdrawals aggregating to ₹20 lakh or more in a financial year; and opening of a current account or cash credit account with such institutions. The obligation to verify and authenticate PAN rests with the concerned bank or post office authority. Exemptions are provided for transactions undertaken by the Central Government, State Governments and Consular Offices. Further exemption is available where the person is a non-resident (not being a company) or a foreign company transacting with an IFSC banking unit, provided such person has no income chargeable to tax in India. The rule also provides that PAN details must be submitted for authentication to the Principal Director General or Director General of Income-tax (Systems) or an authorised person, who will prescribe the formats, standards and procedures for such authentication. The provision aims to enhance traceability and oversight of substantial cash transactions within the financial system.
Rule 161
Transactions for the purposes of section 262(9)(a) of the Act.
(1) For the purposes of section 262(9)(a), every person shall, at the time of entering into a transaction specified in column (2) of the Table below, quote his permanent account number in documents pertaining to such transaction, and every person specified in column (3) of the said Table, who receives such document, shall ensure that the said number has been duly quoted and authenticated—
TABLE
| Sl. No. | Nature of transaction | Person |
| (1) | (2) | (3) |
| 1. | Cash deposit or deposits aggregating to twenty lakh rupees or more in a financial year, in one or more account of a person with, — | (i) A banking company or a cooperative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);(ii) Post Master General as referred to in section 2(j) of the Indian Post Office Act, 1898 (6 of 1898). |
| (i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); | ||
| (i) Post Office | ||
| 2. | Cash withdrawal or withdrawals aggregating to twenty lakh rupees or more in a financial year, in one or more account of a person with,— | (i) A banking company or a
cooperative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including |
| (i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); | any bank or banking institution referred to in section 51 of that Act);
(ii) Post Master General as referred to in section 2(j) of the Indian Post Office Act, 1898 (6 of 1898). |
|
| (ii) Post Office | ||
| 3. | Opening of a current account or cash credit account by a person with,— | (i) A banking company or a cooperative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act);(ii) Post Master General as referred to in section 2(j) of the Indian Post Office Act, 1898 (6 of 1898). |
| (i) A banking company or a co-operative bank to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); | ||
| (iii) Post Office |
(2) The provisions of sub-rule (1) shall not apply in a case where the person carrying out transaction in column (2) of Table is the Central Government, the State Government or the Consular Office.
(3) The provisions of sub-rule (1) shall not apply in a case,—
(a) where the person, carrying out transaction as per Sl. No. 1 to 3 of column (2) of Table 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.
(4) For the purposes of sub-rule (3), “IFSC banking unit” shall have the same meaning as assigned to it in rule 159(7)(i).
(5) The permanent account number of an individual shall be submitted to the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) or the person authorised by the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) with the approval of the Board, for the purposes of authentication referred to in section 262.
(6) Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) shall lay down the formats and standards along with procedure for authentication of permanent account number.
