This is the news for all the credit card users and employers as they may face tighter reporting and taxation norms from April 1, if the Draft Income-tax Rules, 2026 are notified in their current form.
Change in Credit Card Norms
The authorities seek to formalise reporting of high-value credit card payments, strengthen PAN linkage, and clarify how employer-paid credit card expenses will be taxed in the hands of employees as per the draft rules, issued under the upcoming Income-tax Act, 2025
These changes are basically the part of a broader compliance overhaul aimed at improving transparency, tracking high-value financial transactions and aligning lifestyle spending with declared income.
The banks and credit card issuers will be required to report specified high-value credit card payments to the tax authorities through the Statement of Financial Transactions (SFT) mechanism as per this draft.
Moving ahead, annual credit card bill payments exceeding ₹10 lakh in a financial year through non-cash modes are proposed to be reportable.
In addition to this the cash payments aggregating ₹1 lakh or more toward credit card dues in a year will also attract reporting.
Mandatory PAN Linkage With Credit Card
Besides this, the draft rules also talk about tightening PAN integration in the credit card ecosystem.
Additionally, the quoting of Permanent Account Number (PAN) will also become mandatory for obtaining a new credit card as this would be helpful in reinforcing the link between credit usage and a taxpayer’s identity.
The applicants can have procedural relief by allowing a recent credit card statement, not older than three months, to serve as valid address proof while applying for a PAN.
Inclusion Of Credit Cards As A Mode For Tax Payments
In these draft rules, they have recognised credit cards as an approved electronic mode for payment of income tax and other central taxes.
This is helpful as the formal inclusion provides taxpayers an additional digital payment channel for meeting tax liabilities, though applicable bank charges or convenience fees may continue to apply.
This draft provides one of the more significant clarifications related to employer-provided credit cards.
Any expenses — including annual fees or membership charges — incurred by an employee or a member of their household on a credit card provided by the employer, or reimbursed by the employer, will be treated as a taxable perquisite under the draft perquisite valuation rules.
In this scenario, the taxable value will be calculated as the total amount paid or reimbursed by the employer, deducted by any amount recovered from the employee.
But, the value of such benefit will be treated as nil in case the expenditure is incurred wholly and exclusively for official duties.
The employers must maintain complete details of the expenditure, including the date and nature of each expense for this exemption to apply.
They also need to issue a certificate confirming that the expense was incurred entirely for official purposes.
Please note that the personal expenses routed through corporate cards could increase the employee’s taxable salary in the absence of adequate documentation.
These latest provisions will come into effect from April 1, 2026, giving taxpayers, employers and financial institutions time to adjust systems and compliance processes before the new regime begins.
