Credit cards have become a common part of daily life across India. People in big cities as well as smaller Tier-2 and Tier-3 towns now use them regularly for everyday needs in this digital age.
Soon, important changes are set to arrive. Starting April 1, 2026, new rules linked to credit cards and income tax will take effect. The Income Tax Department has released draft Income Tax Rules 2026, which will replace the old rules from 1962. These proposals include five key points that directly affect regular taxpayers and their credit card spending.
First, high-value credit card bill payments will now be reported to the tax department. If a person pays more than ₹10 lakh in a financial year using any non-cash method — such as UPI, bank transfer, or cheque — the bank or card company must inform the authorities. Even cash payments of ₹1 lakh or more will be reported. This kind of tracking already exists in some form under the older 1962 rules, but the new version makes it clearer.
Second, when applying for a PAN card, people can use a credit card statement as proof of address. However, the statement must not be older than three months. Older statements will no longer be accepted.
Third, paying income tax is becoming easier with digital options. The new rules officially allow credit cards, debit cards, and net banking as valid electronic payment methods for tax payments. This will make settling tax dues simpler and more convenient.
Fourth, if a company gives an employee a credit card and pays or reimburses costs like membership fees or annual charges, this benefit will count as a perquisite. Tax will apply on it. When calculating the tax, the amount the employee paid themselves will be subtracted from the total value of the benefit. If all expenses were purely for official work, no tax will be charged — but strict conditions apply. The company must keep full records showing the date and type of each expense. It must also provide a certificate stating that the spending was only for official purposes.
Fifth, applying for a new credit card will require a PAN number without exception. No bank or credit card company can issue a card unless the applicant provides their PAN. This step is meant to link every card to a verified identity.
Overall, these proposed changes aim to bring more openness to transactions, keep a closer watch on large expenses, and strengthen the tax system. If approved, they will start affecting millions of credit card users from April 1, 2026, possibly changing how people manage their spending and payments.
