Credit Card Rules: Big news for every credit card holders. Big changes are on the horizon for credit card regulations starting April 1, 2026. New rules regarding transactions and tax payments might be introduced. Find out what changes to expect and how they could affect your spending habits. The Income Tax Department has just put out the draft Income Tax Rules 2026.
Once these rules get the final nod and any suggestions are taken into account, they should kick in on April 1, 2026. When they do, they’ll replace the old rules from 1962. The draft suggests several key updates concerning credit cards. If they get approved, the new rules could start on April 1.
You’ll need to report large credit card bills
As per the draft rules, if someone pays one or more credit card bills in a financial year and the total hits Rs 10 lakh or more (using any method except cash), the bank or card issuer must notify the Income Tax Department about it. If a cash payment of Rs 1 lakh or more is made, that too will need to be reported. This isn’t entirely new; a similar rule is already part of the old Income Tax Rules from 1962.
Credit card statements can help with PAN applications
According to the draft rules, if your credit card statement is less than three months old, it can be used as proof of address when applying for a PAN. This means that a recent credit card bill from your bank will now work as valid proof of address, as long as it’s within the required timeframe.
You can also use credit cards to pay taxes
Now, credit cards are accepted for online tax payments. Before, only debit cards and net banking were allowed. Now, credit cards are recognized as valid electronic payment methods. This gives taxpayers another option for making payments, making it easier to pay at their convenience.
How will taxes be applied to credit cards that the company issues?
If an employee gets a credit card from their employer and the company covers or reimburses costs like membership or annual fees, that’s seen as a perk and is taxable. When figuring out the tax, the total value of that perk will be deducted from what the employee has paid.
If the spending is strictly for work-related purposes, it won’t be taxed. But there are some conditions to meet. The company needs to keep thorough records of the spending. These records should clearly show the date and type of expense. Additionally, the company must issue a certificate confirming that the spending was exclusively for work purposes.
You need a PAN for a credit card
Now, when you apply for a credit card from any bank or financial institution, you’ll need to provide your PAN number. Applications that don’t include a PAN won’t be processed. This is to connect your transaction history with the Income Tax Department and keep an eye on significant expenses. It helps improve tax compliance and reduces the chances of fraudulent or anonymous transactions.
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