Big changes could soon be coming for credit card users in India.
The Income Tax Department has released the Income Tax Draft Rules 2026, which may replace the old Income Tax Rules, 1962.
While these rules are still in draft form, they introduce several proposals that directly impact how people use their credit cards.
From tighter tracking of high spending to the option of paying taxes with a credit card, here’s what could change.
High-Value Credit Card Spends Under Scanner
One of the biggest proposals focuses on large transactions.
If a person spends Rs 10 lakh or more in a financial year through digital credit card payments (excluding cash), banks or card issuers may have to report the details to the Income Tax Department.
Cash payments of Rs 1 lakh or more may also come under reporting rules.
Reporting of large transactions already exists, but the new draft aims to tighten the system and improve clarity.
The goal is to increase transparency and reduce tax evasion by keeping a closer watch on high-value spending.
Credit Card Statement as Address Proof for PAN
There is some relief too.
Under the draft rules, a recent credit card statement — issued within the last three months — may be accepted as valid address proof while applying for a PAN card.
The statement must clearly show the correct and updated address.
This could help people who do not have utility bills or other traditional address documents.
Paying Income Tax with a Credit Card
Another major proposal is allowing taxpayers to pay their income tax using a credit card.
Currently, most tax payments are made through net banking or debit cards.
If the new rule is approved, credit cards could offer more flexibility and convenience.
However, there is a catch. Banks may charge processing fees or interest, which could make tax payments more expensive if not paid on time.
Rules for Company-Provided Credit Cards
The draft rules also clarify how employer-issued credit cards will be treated.
If a company card is used for personal expenses, the amount may be treated as a “perquisite” — a benefit in addition to salary — and taxed accordingly.
But if the card is used strictly for official work, such as business travel or client meetings, it will not attract tax.
Employers will need to maintain detailed records of official expenses.
If the employee repays any personal spending, that amount will be deducted while calculating the taxable value.
PAN Mandatory for New Credit Cards
The draft also proposes making PAN compulsory for applying for a credit card.
Banks and financial institutions would not process applications without linking the card to a PAN.
This step aims to connect major financial transactions directly to tax records and prevent misuse or anonymous spending.
What This Means for You
If approved, these changes could reshape how credit cards are used in India from April 1, 2026.
Heavy spenders may face closer monitoring. Taxpayers could gain more payment flexibility.
And documentation requirements will become stricter.
The overall message is clear: the government wants a more transparent and accountable credit ecosystem.
For credit card users, staying informed and planning spending carefully will become more important than ever.
