The Income-tax Department has unveiled the draft Income-tax Rules 2026, which are set to replace the existing Income-tax Rules 1962 from April 1, 2026, subject to final approval after considering stakeholder feedback. These proposed rules include several significant provisions affecting credit card holders across India.

Here’s what you need to know about the five key credit card-related changes:

1. Mandatory Reporting of High-Value Credit Card Payments

Under the new draft rules, banks and credit card issuers will be required to report certain transactions to the Income-tax Department through their statement of financial transactions. Specifically, credit card bill payments exceeding ₹10 lakh made through any mode other than cash will need to be reported. Additionally, cash payments of ₹1 lakh or more toward credit card bills will also come under scrutiny.

The draft rules state that payments made by any individual against credit card bills during a financial year, aggregating to either ₹1 lakh or more in cash, or ₹10 lakh or more through other payment modes, must be disclosed.

It’s worth noting that this isn’t entirely new—the current Income-tax Rules 1962 already contain similar provisions. However, the updated language clarifies the reporting requirements.

2. Credit Card Statements Now Valid as Address Proof for PAN Applications

In a move that could simplify documentation requirements, the draft rules propose accepting credit card statements as valid proof of address when applying for a Permanent Account Number. However, there’s a catch—only statements not older than three months will be considered acceptable.

3. Credit Cards Officially Recognized for Tax Payments

The draft rules explicitly list credit cards, along with debit cards and net banking, as approved electronic payment modes for settling tax dues. This formal recognition provides taxpayers with greater flexibility in managing their tax payments.

4. Clear Guidelines on Corporate Credit Cards and Perquisite Taxation

For employees who receive credit cards from their employers as a perquisite, the draft rules have introduced detailed taxation guidelines. When an employer provides a credit card (including add-on cards) and pays for or reimburses expenses incurred by the employee or their household members, the taxable value will be calculated as the total benefit minus any amount already paid by the employee.

However, there’s good news for those using corporate cards strictly for business purposes. The rules state that no taxable benefit will be calculated if:

  • The expenses are incurred wholly and exclusively for official purposes
  • The employer maintains complete details of such expenditure, including dates and nature of expenses
  • The employer provides a certificate confirming the expenses were purely for official duties

5. PAN Mandatory for Credit Card Applications

The draft rules make it clear that a Permanent Account Number is compulsory when applying for a credit card from any bank or credit card issuing institution. This requirement aims to strengthen the link between financial transactions and tax records.

What’s Next?

These are still draft rules, and the Income-tax Department is seeking feedback from stakeholders before finalizing them. Once approved, they will come into effect from April 1, 2026. Credit card users and financial institutions should prepare for these changes and ensure compliance with the new reporting and documentation requirements.

If you’re a credit card holder, it’s advisable to maintain proper records of your transactions and payments, especially if they fall within the reporting thresholds mentioned above. As always, consulting with a tax advisor can help you navigate these changes effectively.