PAN Card for Financial Transactions: When Is PAN Mandatory in India?

A PAN card is important for financial transactions because the Income Tax Department requires PAN for several specified banking, investment, property, and high-value transactions. However, PAN is not automatically mandatory for every payment or financial activity. The applicable requirement depends on the transaction type, value, and current income-tax rules.

This guide explains when PAN is required, the major transaction thresholds, what to do if you do not have PAN, and common mistakes to avoid.

Is PAN Mandatory for Every Financial Transaction?

No, PAN is not mandatory for every financial transaction in India. The law specifies particular transactions for which a person must quote PAN in the relevant documents or application.

For example, opening certain bank accounts, applying for a credit or debit card, opening a demat account, purchasing property above the prescribed threshold, and making certain high-value payments may require PAN.

Banks, financial institutions, and other service providers may also request PAN or additional identification for KYC, tax reporting, or internal compliance purposes. Therefore, a bank's request for PAN should not automatically be interpreted as meaning that the same legal threshold applies to every type of transaction.

Financial Transactions That Require PAN

The applicable transaction requirements are set out in the relevant income-tax rules. The following table summarises important categories under the Rule 114B framework. The current Income Tax Rules, 2026 and any applicable transition provisions should be checked before publication or reliance.

The official Rule 114B table should be consulted to confirm the exact transaction description, exclusions, and applicable conditions. 

Important: PAN Thresholds Are Transaction-Specific

The ₹50,000 threshold does not apply to every financial activity. For example, the threshold for purchasing mutual fund units differs from the requirement for opening a demat account, where PAN is required for the covered account opening transaction.

Similarly, the property transaction threshold differs from the threshold for the purchase of goods or services. Readers should therefore check the category that matches their specific transaction instead of relying on a general PAN limit.

PAN Requirements for Banking Transactions

PAN is commonly requested during banking activities, but the requirement depends on the type of account or transaction.

Opening a Bank Account

PAN is required for opening covered accounts with a banking company or cooperative bank. The rule excludes certain categories, including specified Basic Savings Bank Deposit Accounts and time deposits covered separately by the relevant provision.

Banks may also request PAN as part of their KYC and account-opening procedures.

Cash Deposits

Under the Rule 114B framework, PAN must be quoted for cash deposits exceeding ₹50,000 in one day with a covered bank or Post Office.

This requirement should not be confused with the reporting of financial transactions by banks. A reporting institution may have separate obligations under applicable tax and regulatory provisions.

Fixed and Recurring Deposits

Time deposits are subject to specific thresholds. PAN may be required when the deposit exceeds ₹50,000 or when the aggregate amount exceeds ₹5 lakh during the financial year, subject to the applicable institution and rule.

The precise requirement should be confirmed with the bank or financial institution before making the deposit.

PAN for Investments and Securities

PAN helps financial institutions and investment intermediaries identify investors and maintain transaction records.

PAN is required for covered transactions such as:

• Opening a demat account.
• Purchasing mutual fund units above the prescribed threshold.
• Acquiring specified bonds and debentures.
• Entering into covered securities transactions exceeding the applicable value.
• Buying or selling shares of an unlisted company above the specified threshold.

Investment platforms may also request PAN and other KYC information under applicable securities and anti-money-laundering requirements. PAN alone does not replace all other documentation.

PAN for Property Transactions

PAN is required for covered purchases or sales of immovable property where the transaction amount exceeds ₹10 lakh or the value determined by the applicable stamp valuation authority exceeds ₹10 lakh.

The requirement applies to the specified transaction and should not be confused with capital gains tax calculations, property registration procedures, or income-tax return filing.

For a property transaction, buyers and sellers should ensure that the PAN details provided in the relevant documents are accurate. Additional documentation may be required by the registering authority, financial institution, or tax professional.

PAN for High-Value Purchases and Services

PAN quoting may be required for the purchase of goods or services not covered by the other listed transaction categories when the transaction amount exceeds ₹2 lakh per transaction.

This does not mean that PAN is required for every ordinary purchase. The applicable provision depends on the nature and value of the transaction, along with any exclusions or conditions in the relevant rules.

Consumers should verify the requirement with the seller or service provider when undertaking a high-value transaction.

Can You Complete a Financial Transaction Without PAN?

In certain situations, a person without a PAN may be permitted to submit a prescribed declaration instead. Under the Income Tax Act, 2025 framework, Form 97 replaces the earlier Form 60 for relevant transactions covered by Rule 159(2) of the Income Tax Rules, 2026.

Form 97 is not a universal substitute for PAN. Its use depends on the transaction, the person's status, income-related conditions, and other requirements under the applicable rules.

A person should not submit an alternative declaration without confirming that the transaction qualifies. Where PAN is required and no permitted alternative is available, the individual may need to apply for PAN before completing the transaction.

Do NRIs Need PAN for Financial Transactions in India?

NRIs may need PAN when they undertake financial transactions that require PAN quoting. Residential status alone does not automatically remove the requirement.

For example, an NRI may need PAN for covered investment, property, banking, or tax-related activities in India. The exact requirement depends on the transaction, account type, applicable tax provisions, and the documentation the institution requests.

NRIs who do not have PAN should verify whether they can use an applicable declaration or whether they need to apply for PAN. A dedicated NRI PAN guide can explain the application process and supporting documents in greater detail.

Common Mistakes to Avoid

The following mistakes can lead to delays or incorrect transaction records:

1. Entering an incorrect PAN number.
2. Providing PAN details that do not match official records.
3. Assuming that one threshold applies to all financial transactions.
4. Confusing PAN quoting with tax payment or tax filing.
5. Relying on outdated information about Form 60 or Form 97.
6. Sharing PAN details through unverified websites or individuals.
7. Assuming that an NRI or foreign national is automatically exempt from PAN requirements.

Always check the latest official guidance before completing a regulated or high-value transaction.

Conclusion

PAN is an important identification number for specified financial transactions in India. However, the applicable requirement depends on the type and value of the transaction, and no single PAN limit applies to every financial activity. Before completing a banking, investment, property, or high-value purchase transaction, verify the current rules and provide accurate PAN details where required.

If you need help with PAN card application, correction, reprint, or NRI PAN assistance, Visament can help you understand the documentation and application requirements based on your situation.