From high-value swipe scrutiny to tax payments: 5 big changes proposed for credit card users

The draft also introduces a documentation-related relaxation that could simplify PAN applications.

• Credit card spends over Rs 10 lakh may face stricter reporting
• Credit card statements could serve as proof of address for PAN
• Taxpayers may soon pay income tax using credit cards

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Credit card usage in India could soon come under sharper regulatory oversight if the proposed Income Tax Draft Rules, 2026 are notified in their current form. The draft framework, released by the Income Tax Department to replace the Income Tax Rules, 1962, outlines a series of changes aimed at tightening compliance, widening reporting requirements and improving transparency in financial transactions.

A key proposal relates to enhanced monitoring of large credit card spends. The draft suggests that banks and card issuers may be required to report cases where an individual’s annual digital payments via credit card — excluding cash — total Rs 10 lakh or more in a financial year, according to News18. In addition, cash payments of Rs 1 lakh or above toward credit card dues could also trigger reporting obligations. While high-value transactions are already subject to certain disclosures, the revised rules seek to formalise and strengthen oversight of substantial spending patterns, the channel reported.

The draft also introduces a documentation-related relaxation that could simplify PAN applications. Credit card statements issued within the past three months may be accepted as proof of address, provided they reflect the applicant’s current residential details. This provision could assist individuals who do not possess conventional address documents such as electricity or water bills.

Another notable proposal would allow taxpayers to settle income tax liabilities using credit cards, News18 said. Currently, tax payments are largely routed through net banking or debit cards. If implemented, the measure could offer added convenience and liquidity flexibility. However, users would need to weigh the costs, as banks may impose processing fees or interest charges, potentially increasing the overall expense of paying taxes through credit.

The draft also clarifies the tax implications of employer-issued credit cards. Personal expenditure made using a company-provided card may be classified as a taxable perquisite — an additional benefit beyond salary. In contrast, expenses incurred strictly for official purposes, such as travel, client engagement or work-related entertainment, would remain exempt. Employers would be required to maintain detailed documentation to substantiate business-related spending, and any reimbursement by the employee would reduce the taxable amount.

Further strengthening compliance, the proposed rules mandate quoting a PAN at the time of applying for a credit card. Financial institutions would be barred from issuing cards without this information, ensuring that significant financial activity remains linked to tax records.

Although still in draft form, the proposed changes signal a move toward a more closely tracked credit ecosystem. If brought into effect from April 1, 2026, they could materially alter how heavy credit card users manage spending, documentation and tax obligations.