If you use a credit card for everyday expenses, online shopping or tax payments, several rules may change for you starting April 1, 2026. The Income Tax Department has proposed five major changes related to credit cards in the draft Income Tax Rules 2026. If approved, these rules could replace the 1962 provisions. Therefore, it’s important to understand how these changes will impact your finances and tax planning.
1. Strict reporting on large credit card bills
According to the new draft, if the total amount of payments made on one or more of your credit cards in a financial year (excluding cash) is Rs 10 lakh or more, the bank or card issuing company will be required to report this information to the Income Tax Department. Similarly, if payments of Rs 1 lakh or more are made in cash, reporting will also be mandatory. This is intended to monitor large transactions and strengthen tax compliance.
2. Credit card statement will be useful while applying for PAN
Credit card statements less than three months old can now be accepted as proof of address. This will provide greater convenience to new PAN applicants and simplify the document collection process.
3. Credit card approval for tax payments
Credit cards will now be a valid electronic payment method for paying income tax online. Previously, only debit cards and net banking were available. This change will provide taxpayers with flexibility in payment, although they will need to be aware of interest and charges.
4. Tax rules on company-issued credit cards
If an employee gets a company-issued credit card and the company pays for expenses incurred on that card, it is considered a perquisite and is subject to tax. However, if the expenses are solely for official purposes and the company maintains complete records and certifications, they may be tax-exempt.
5. PAN is mandatory for credit cards
Now, providing a PAN number will be mandatory for obtaining a credit card from any bank or institution. Applications without a PAN will not be accepted. This aims to link large transactions to the tax system and curb fake accounts.
