CHENNAI: Several key changes to credit card rules will come into effect from April 1, including mandatory PAN submission for new applications, enhanced monitoring of high-value transactions, and provisions allowing payment of income tax through credit cards.
The new measures are aimed at improving financial transparency, linking spending with the tax system and reducing misuse of credit cards.
Here are some key questions and answers explaining the upcoming changes.
From April 1, applicants must provide a Permanent Account Number (PAN) while applying for a credit card. Banks will not accept applications without PAN details. The move is intended to link credit card spending with the tax system and curb fraudulent or fake accounts.
Banks will have to report high-value credit card transactions to the Income Tax Department. If a customer spends Rs 10 lakh or more through non-cash credit card transactions in a financial year, the bank must report the details.
Yes. Cash transactions of Rs 1 lakh or more carried out through credit cards will also come under scrutiny. High-value transactions will be tracked to ensure transparency and prevent misuse.
Yes. Under the revised rules, taxpayers can pay income tax using a credit card. However, such payments may attract processing fees and interest charges depending on the card issuer, so users are advised to exercise caution.
Companies that issue credit cards to employees will need to monitor their usage carefully. If such cards are used for personal expenses, the amount may be treated as part of the employee’s income and could attract tax. Therefore, companies must clearly separate official and personal expenses.
Yes. A credit card statement issued within the last three months can now be used as a valid address proof when applying for a PAN card. This change is expected to simplify the PAN application process by reducing the need for additional documents.