Credit Card Rules – Tightening of Credit Card Rules from April 1 – 5 Major Rules to Change

Credit Card Rules: Several significant changes may apply to credit card users from April 1, 2026. The Income Tax Department recently released the Draft Income Tax Rules 2026. These will be finalized after considering suggestions and objections. If implemented, these rules will replace the old Income Tax Rules in effect since 1962. These proposed changes could directly impact credit card usage, tax payments, and financial reporting.

Reporting of Large Credit Card Bills

According to the draft rules, if an individual makes a total payment of ₹10 lakh or more on one or more credit card bills during a financial year, the bank or card-issuing institution will be required to report the same to the Income Tax Department. This limit will apply to all modes of payment except cash payments.

Furthermore, reporting of payments of ₹1 lakh or more in cash will also be mandatory. Although such a provision existed in the rules previously, the new draft incorporates it in a clearer and more systematic way.

Credit Card Statements Will Be Useful for PAN Applications

Under the new proposals, if an individual’s credit card statement is not more than three months old, it can be accepted as proof of address during a PAN application. This means that even a recent credit card bill will now be valid as proof of address, provided it was issued within the prescribed timeframe. This could simplify the documentation process somewhat.

New Options for Tax Payments

Until now, digital methods such as debit cards and net banking have been authorized for income tax payments. Under the proposed rules, credit cards can now also be included as authorized electronic payment methods. This will provide taxpayers with additional convenience in filing taxes and allow them to plan their payments according to their cash flow.

Learn about tax provisions on credit cards

If an employee is provided a credit card by their company and the company pays for expenses incurred through that card, such as annual fees or membership fees, it is considered a perquisite, or additional benefit. Such benefits are taxable under income tax rules.

When calculating tax, the amount paid by the employee himself will be deducted from the total amount of the benefit. However, if the expense is solely related to official work and the company provides appropriate documentation and proof, it will not be taxable. To do this, the company must maintain a complete record of the date, nature, and purpose of the expense.

PAN Mandatory for Credit Cards

The draft rules also propose that providing a PAN number will be mandatory when applying for a credit card from any bank or financial institution. Applications without a PAN will not be accepted. The purpose of this is to link transactions with income tax records and strengthen monitoring of large expenditures. This could help curb tax evasion and anonymous transactions.