He will be appearing alongside the veteran actor in Matru Ki Bijlee Ka Mandola.
Khan told IANS: "Pankaj Kapoor as an actor is a very challenging co-star to act opposite, because he improvises a lot and he pulls out new things as they happen.
"You have to be in the moment with him, you have to be ready with whatever he will do, and you have to be ready to pick that up and take it forward."
Talking about director Vishal Bhardwaj, he added: "I was very surprised by his style of directing. He gives a lot more freedom to the actors than I expected. If during the take, you decide to do something different, he will let you do that. He liberates the actor and puts a lot of power in actor's hands."
In October, Khan admitted that he had almost dropped out of the film because he found speaking Haryanvi too difficult.
He reportedly spent up to five hours a day learning the Indian dialect for the role.
Watch the trailer for Matru Ki Bijlee Ka Mandola below: