Big changes are coming to credit card regulations starting April 1, 2026. These changes, related to transactions
and tax payments, are part of the draft Income Tax Rules 2026 released by the Income Tax Department. Once finalized, these rules will replace the old 1962 rules.
The new provisions could affect how you use credit cards, report payments, and pay taxes. Here’s what you need to know.
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Reporting Large Credit Card Payments
The draft rules state that:
If your total credit card payments in a financial year reach ₹10 lakh or more (through any method other than cash), the bank or card issuer must inform the Income Tax Department.
If you pay a single bill of ₹1 lakh or more in cash, it will also be reported.
This rule is not entirely new; a similar provision already existed under the Income Tax Rules, 1962.
Credit Card Statements as Proof of Address
Under the new rules, a credit card statement up to three months old can now be used as proof of address when applying for a PAN. This means your recent credit card bill from the bank will be accepted if it is within this timeframe.
Paying Taxes Using Credit Cards
You can now use credit cards to pay taxes online. Previously, only debit cards and net banking were allowed. This change gives taxpayers an extra option and makes online tax payments more convenient.
Tax on Company-Issued Credit Cards
If your company issues a credit card and pays or reimburses expenses (like membership or annual fees):
The benefit is considered a taxable perquisite. The total value of the benefit is added to your income for tax calculation.
If the expenses are solely for official purposes, they are not taxable, provided the company:
Maintains complete records of the expenditure, including date and type.
Provides a certificate confirming the expenditure was for official use only.
PAN Required for Credit Card Applications
From now on, you must provide a PAN number when applying for a credit card. Applications without a PAN will be rejected.
The aim is to link credit card transactions with the Income Tax Department, improve tax compliance, and prevent fraudulent or anonymous transactions.
These changes will affect how people use credit cards, report payments, and pay taxes. Knowing them in advance can help you stay compliant and avoid surprises.