Rule 159 of Income explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Rule 159 of the Income-tax Rules, 2026 lists the transactions in which a person must quote his PAN, prescribes Form No. 97 as the declaration where a non-company non-firm has no PAN, and places a verification and record-keeping duty on the person receiving the document.
The structure of the rule
Rule 159 replaces rules 114B and 114BA of the Income-tax Rules, 1962 and gives effect to section 262(1)(f) and section 262(10)(c) and (e). It has three moving parts:
- a Table in sub-rule (1) listing the transaction, the value threshold, and the person who receives or issues the document;
- substitutes — a parent's PAN for a minor, and Form No. 97 where there is no PAN; and
- a duty on the receiving person to verify and record.
Transactions in the Table
The following entries are set out in the Table in rule 159(1):
| Sl. No. | Transaction | Value threshold |
|---|---|---|
| 1 | Application to a banking company, co-operative bank, or any other company or institution for issue of a credit card | All such transactions |
| 2 | Opening an account with a depository, participant, custodian of securities or other person registered under section 12(1A) of the SEBI Act, 1992 | All such transactions |
| 3 | Payment to the Reserve Bank of India for acquiring bonds issued by it | Amount exceeding Rs 50,000 |
| 4 | Payment to a Mutual Fund for purchase of its units | Amount exceeding Rs 50,000 |
| 6 | Cash deposits with a banking company, co-operative bank or post office | Aggregating to Rs 10 lakh or more in a financial year, in one or more accounts of a person |
| 7 | Cash withdrawals from a banking company, co-operative bank or post office | Aggregating to Rs 10 lakh or more in a financial year, in one or more accounts of a person |
| 8 | Sale or purchase of a motor vehicle or motor cycle requiring registration under Chapter IV of the Motor Vehicles Act, 1988, other than a tractor as defined in section 2(44) of that Act | Amount exceeding Rs 5,00,000 |
| 13 | A time deposit with a banking company, co-operative bank, post office, a Nidhi under section 406 of the Companies Act, 2013, or an NBFC holding a certificate of registration under section 45-IA of the RBI Act, 1934 | Threshold stated in the Table |
| 14 | Commencement of an account-based relationship with an insurer as defined in section 2(9) of the Insurance Act, 1938 | Where insurance premium exceeds the amount stated in the Table |
The Table in rule 159(1) contains further entries — including sale or purchase of unlisted shares, immovable property, bank account opening, and cash payments to hotels, restaurants, convention centres, banquet halls and event managers. The value thresholds for several of these should be read directly from the notified Table rather than assumed from the 1962 position, because the transaction descriptions have been re-drafted. This article states only the rows that can be quoted with confidence.
Substitutes where there is no PAN — rule 159(2)
- (a) Minors. A person who is a minor, not having any income chargeable to tax, who enters into any of the listed transactions, quotes the PAN of his father, mother or guardian in the document.
- (b) Form No. 97. A person not being a company or a firm, who does not have a PAN, entering into transactions at Sl. Nos. 11 to 16, makes a declaration in Form No. 97 giving the particulars of the transaction.
- (c) IFSC. A foreign company entering into a transaction at Sl. No. 12 or 13 in an IFSC banking unit, which has neither a PAN nor any income chargeable to tax in India, makes a declaration in Form No. 97.
Form No. 97 is therefore the successor to Form 60 of the 1962 Rules.
When a PAN must actually be applied for — rule 159(3) and (4)
For the purposes of section 262(1)(f), a person not being a company or a firm and who does not have a PAN shall apply for one where he enters into:
- (a) any of the transactions at Sl. Nos. 1 to 10; or
- (b) the transaction at Sl. No. 11, where the amount of the immovable property exceeds forty-five lakh rupees, or its value as per the stamp valuation authority referred to in section 78 of the Registration Act, 1908 exceeds forty-five lakh rupees.
These are two different obligations and they attach to different rows. For Sl. Nos. 11 to 16, a person without PAN may make a Form No. 97 declaration. For Sl. Nos. 1 to 10 — and for a high-value immovable property transaction at Sl. No. 11 — the person must actually apply for a PAN. A declaration is not a substitute where sub-rule (3) requires an application.
Rule 159(4) switches off sub-rule (3) where all three of the following hold:
- the person carrying out the Sl. Nos. 1 to 10 transaction is a non-resident (not being a company) or a foreign company;
- the transaction is entered into with an IFSC banking unit; and
- that person has no income chargeable to tax in India.
The receiving person's duty — rule 159(5)
The person referred to in column (4) of the Table, who has received or issued the document, must ensure that:
- (a) the PAN, after verification, has been duly and correctly mentioned in the document, or a Form No. 97 declaration has been duly furnished with complete particulars;
- (b) the valid PAN, or the fact of furnishing Form No. 97, is duly mentioned in the records maintained for those transactions; and
- (c) the PAN or the Form No. 97 details are linked and mentioned in any information furnished to the income-tax authority or any other authority or agency under the Act or any rule.
Three separate obligations sit here: verify, record, and carry through to reporting. It is not enough to collect a PAN; the receiving person must satisfy itself the PAN is valid, keep it in its own records, and ensure it flows into statements such as the statement of financial transaction under rule 237.
Who is outside rule 159 altogether — sub-rule (6)
Rule 159(1) does not apply to the following classes of persons:
- (a) the Central Government, State Governments and consular offices; and
- (b) the non-residents referred to in section 2(72), in respect of the transactions at Sl. No. 1, 3, 15 or 16 of the Table.
Clause (b) is a targeted relief, not a general one. A section 2(72) non-resident is outside the quoting requirement only for those four listed rows; for every other row in the Table the obligation stands.
The two definitions — sub-rule (7)
- "IFSC banking unit" means a financial institution defined under section 3(1)(c) of the International Financial Services Centres Authority Act, 2019, that is licensed or permitted by the International Financial Services Centres Authority to undertake permissible activities under the IFSCA (Banking) Regulations, 2020.
- "Time deposit" means any deposit which is repayable on the expiry of a fixed period.
The IFSC definition matters beyond rule 159: rule 161(4) expressly borrows it, so the same test governs the IFSC relief from PAN authentication for large cash movements.
Authentication procedure — sub-rule (8)
The Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) lays down the formats and standards, together with the procedure, for the manner of authentication of PAN.
Rule 160 — reporting the Form No. 97 declarations
Collecting a Form No. 97 declaration is not the end of the obligation. Rule 160 requires specified recipients to report those declarations onward in Form No. 98. This is covered in detail in the article on rule 160; in outline, a person who receives a Form No. 97 must:
- furnish a statement in Form No. 98 to the Director or Joint Director of Income-tax (Intelligence and Criminal Investigation) by online transmission, and obtain an acknowledgement number; and
- retain the Form No. 97 for six years from the end of the financial year in which the transaction was undertaken.
Rules 114B / 114BA and rule 159 compared
| Point | 1962 Rules | Rule 159 (2026) |
|---|---|---|
| Rules | 114B and 114BA | Consolidated into rule 159 |
| Declaration form | Form 60 | Form No. 97 |
| Parent provision | Section 139A | Section 262(1)(f) and 262(10)(c) and (e) |
| Minor's PAN | Parent or guardian's PAN | Father, mother or guardian's PAN |
| Immovable property application threshold | Rs 10 lakh under rule 114B; higher thresholds elsewhere | Rs 45 lakh — amount or stamp value |
| IFSC relief | Limited | Express in rule 159(4) |
Compliance checklist for reporting entities
- Verify every PAN collected, not merely record it — rule 159(5)(a) says "after verification".
- Where a PAN is unavailable, obtain Form No. 97 with complete particulars; an incomplete declaration does not satisfy the rule.
- For a minor, capture the parent or guardian's PAN and evidence of the minor's status.
- Ensure the PAN or Form No. 97 reference flows into transaction records and into any statement filed with the department.
- Check the IFSC exemption conditions cumulatively — all three must hold.
- Read the current Table for the value threshold applicable to the particular transaction.
Common mistakes
- Accepting a declaration where a PAN application is required. Sl. Nos. 1 to 10 and high-value property need an application.
- Collecting PAN without verifying it.
- Treating the IFSC relief as available to any non-resident. All three conditions must be met.
- Citing Form 60 for tax year 2026-27 transactions.
- Assuming the old thresholds carried across unchanged.