New Income Tax Rules: Income Tax Department Put Credit Card Spending Under Tight Scrutiny; What To Expect From April 1

New Income Tax Act: The Draft Income Tax Rules 2026, which was released by the Income Tax Department, has proposed to introduce a set of new rules related to credit card transactions and taxation, hinting at major regulatory shifts for credit card users across the country.

The draft rules are set to replace the Income Tax Act 1962, which is a nearly six-decade-old 1962 regulations. The draft rules propose significant changes that will affect how large expenditures are reported, how taxes are paid, and even how PAN applications are processed.

Currently, the new draft rules are pending final approval. Post the public suggestions period, these changes may come into effect from April 1, 2026.

Mandatory Reporting for Large Transactions

As per the provisions introduced under the draft, if a credit card user pays one or more credit card bills totaling Rs 10 lakh or more in a financial year through any mode other than cash, the bank will be required to report this information to the Income Tax Department. Furthermore, the rules say that any single bill payment of Rs 1 lakh or more made in cash must also be reported by the bank.

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Credit Card Statements Valid for PAN Application

To bring convenience, the draft rules proposed that a credit card statement (not more than three months old) can be used as a valid proof of address when applying for a Permanent Account Number (PAN). The development will make credit card bills a legitimate document for address verification.
Credit Cards Authorized for Online Tax Payments

Additionally, the new tax rules bring more flexibility for online tax payments, as credit cards have been included in the list of authorized electronic payment modes. Earlier, only debit cards and net banking were accepted.

Taxation Of Company-Issued Credit Cards

Specifying the tax implications for employees who use company-issued credit cards, the rules say that if a company pays or reimburses expenses such as membership or annual fees incurred on an employee's credit card, the value of this benefit will be treated as a taxable perquisite.

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PAN Requirement for Credit Card Applications

The draft rules link transaction records with the Income Tax Department and better monitor large expenditures. The draft rules make providing a PAN number mandatory for any new credit card application. Banks and institutions will not accept applications without a valid PAN, a measure intended to curb fraudulent or benami transactions and enhance overall tax scrutiny.