Starting April 1, 2026, significant changes in credit card regulations are expected. These changes, related to transactions and tax payments, will affect how you use and report your credit cards.
The Income Tax Department has released the draft Income Tax Rules 2026, which will replace the old 1962 rules once finalized.
These new rules include several important provisions for credit card users, which could come into effect from April 1, 2026.
Reporting of Large Credit Card Bills
Under the draft rules:
If a person pays one or more credit card bills totaling ₹10 lakh or more in a financial year (through any mode other than cash), the bank or card issuer must report it to the Income Tax Department.
Any single bill of ₹1 lakh or more paid in cash will also need to be reported.
This rule is not entirely new—similar provisions existed in the old 1962 Income Tax Rules.
Credit Cards as Proof and Payment Tool
Proof of Address for PAN: A credit card statement up to three months old can now be submitted as proof of address when applying for a PAN. This means even a recent bill from your bank will be valid for this purpose.
Paying Taxes with Credit Cards: Previously, only debit cards and net banking were allowed for tax payments. The new rules allow taxpayers to use credit cards for online tax payments, giving more flexibility and convenience.
Taxation of Company-Issued Credit Cards
If an employee is issued a credit card by their company:
Personal benefits are taxable: Expenses such as membership fees or annual fees paid or reimbursed by the company are considered perquisites and are taxable. The taxable amount is calculated after subtracting any amount paid by the employee.
Official expenses are exempt: If the expenses are entirely for official purposes, they will not be taxable, provided:
The company maintains complete records of the expenditure.
The records clearly state the date and type of expense.
A certificate is issued confirming the expenditure was solely for official purposes.
PAN Required for Credit Card Applications
From now on, every credit card application must include a PAN number. Applications without a PAN will not be accepted.
This ensures that credit card transactions are linked with the Income Tax Department, improving tax compliance and reducing fraudulent or anonymous transactions.
