The Income Tax Department has introduced new Forms 97 and 98, replacing Forms 60 and 61, as part of reforms under the Income Tax Act, 2025, which came into effect on April 1.
The move is aimed at simplifying compliance and reducing the burden on taxpayers by streamlining older, more complex forms used for reporting certain transactions.
According to the department, Form 97 will be filed by individuals who do not possess a PAN and are entering into specified transactions. Form 98, on the other hand, will be filed by entities or individuals who receive Form 97 declarations, ensuring proper reporting under the new rules.
The department said the changes are expected to significantly reduce filings, from around 12.5 crore annually to below two crore.
Under the revised rules, PAN has been made mandatory for several high-value transactions, eliminating the need to file Form 97 in such cases. These include the purchase or sale of motor vehicles above Rs 5 lakh, applying for a credit card, opening a demat account, buying RBI bonds above Rs 50,000, and investing in mutual funds above Rs 50,000.
However, Form 97 can still be used in cases where PAN is not mandatory. These include payments exceeding Rs 1 lakh to hotels or restaurants for events, opening a bank account, property transactions above Rs 20 lakh, and buying or selling unlisted shares worth over Rs 1 lakh.
Form 98 applies to all persons who receive Form 97 declarations for transactions specified under Rule 159 of the Income-tax Rules, 2026, ensuring accountability and compliance within the reporting system.
The department said the overhaul is part of a broader effort to modernise tax processes and make them more efficient.