💳 Draft Income-tax Rules 2026: 5 Key Credit Card Changes You Must Know

The proposed Draft Income-tax Rules, 2026 (effective 1 April 2026, subject to approval) introduce enhanced reporting and compliance norms for credit card users.

Here are the critical updates:

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1️⃣ High-Value Credit Card Payments to be Reported

📌 ₹10 lakh or more (non-cash) in a financial year → Reported by banks/card issuers to the Income-tax Department.
📌 ₹1 lakh or more in cash towards credit card bill → Also reportable.

⚠️ Implication: Large payments will fall under automated financial intelligence tracking.

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2️⃣ PAN Mandatory for Credit Card Application

🪪 PAN is compulsory for applying for a credit card.
Ensures identity validation and financial transparency.

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3️⃣ Credit Cards Allowed for Online Tax Payments

💻 Taxes can be paid using credit cards (along with net banking/debit card).
✔️ Improves liquidity flexibility
✔️ Useful for short-term cash flow management

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4️⃣ Employer-Provided Credit Cards – Perquisite Valuation Rules

If an employer provides a credit card:

✔️ Taxable perquisite = Amount charged
➖ Less: Amount recovered from employee

❗ Not taxable if used exclusively for official purposes, subject to:

• Proper expense records maintained

• Employer certification confirming official usage

Strong documentation will be critical to avoid tax exposure.

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5️⃣ Credit Card Statement as Address Proof

📄 Statement (not older than 3 months) can be used as address proof while applying for PAN.

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📊 Strategic Takeaway

The draft rules indicate:

• Enhanced financial reporting framework

• Greater transparency on high-value transactions

• Increased scrutiny of lifestyle-to-income mismatches

High-spending individuals and business owners should align financial records proactively.

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For structured tax planning and compliance advisory:
📞 +91 77602 52581

#IncomeTax #DraftRules2026 #CreditCard #TaxCompliance #FinancialPlanning

GST CLARIFICATION ON MILK & SCHOOL PRODUCTS

 

Finance Minister Nirmala Sitharaman has clarified key GST concerns raised in the Lok Sabha regarding taxation on essential dairy and school items.

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🥛 No GST on Milk

✔ Fresh milk remains fully exempt from GST.
✔ No change in tax treatment on basic milk consumption.

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🎓 No GST on Education

✔ Core education services are GST exempt.
✔ School education remains outside the GST net.

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✏ GST on School Materials – Clarification

Some processed or packaged school-related products may attract GST depending on classification. However:
✔ Essential educational services – Exempt
✔ Basic necessities – Mostly Nil or low rate
✔ Certain dairy items have seen rate rationalisation/reduction in past GST Council decisions

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📌 Key Takeaway

There is no GST on milk and education services. Public concerns largely arise due to classification differences between raw and packaged/processed goods.

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If you need clarity on GST classification, rate applicability, or compliance impact on your business, feel free to connect.

#GSTUpdate #FinanceMinister #GSTIndia #TaxClarity #BusinessCompliance

Appointment of Auditor — Casual Vacancy Due to Death

When a statutory auditor passes away during their term, the vacancy is treated as a casual vacancy under Section 139(8) of the Companies Act, 2013. ✅ The Board of Directors is empowered to appoint a new auditor within 30 days ✅ No shareholder approval or EGM is required ✅ The appointed auditor holds office until the next AGM ✅ Form ADT-1 must be filed with ROC after appointment This provision ensures continuity in statutory audit and protects compliance timelines. If your company faces such a situation, timely Board action and proper documentation are critical for regulatory compliance. Need guidance on Board resolutions, filings, or audit compliance? We’re here to help.

📌 PF & ESI Compliance — New Company with No Employees

A newly incorporated private limited company often receives PF and ESI registration along with incorporation. A common question is — are returns mandatory even when there are no employees?

Here’s the compliance clarity:

✅ PF (EPF)
If there are no employees or no PF-eligible wages, monthly contribution filing is not required. However, the employer should regularly log in and maintain correct establishment status to avoid compliance alerts.

✅ ESI
Once registered, Nil contribution filing is expected even if there are zero employees. This keeps the portal compliance status clean.

⚖ Threshold Rule
PF normally applies at 20+ employees and ESI at 10+ employees. But once registration is active, compliance continues until formally closed — even if employee count drops.

👉 Best practice: Maintain payroll records, portal hygiene, and file Nil ESI returns where applicable to avoid notices.

Need help managing statutory compliance? Professional guidance ensures smooth operations from day one. 
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📢 CBDT Draft Update — Consolidated Tax Audit Form

CBDT has released Draft Form No. 26 under the proposed Income-tax Rules, 2026 — introducing a single consolidated tax audit report that replaces existing Forms 3CA / 3CB / 3CD.

✅ One unified audit + statement of particulars
✅ Expanded disclosures — GST, TDS & specified transactions
✅ UDIN & CA signature compliance

Action point: Businesses and CAs should review audit templates and prepare for enhanced reporting requirements.

Need a practical checklist to align your audit process? Message us — happy to help.

Foreign Tax Credit (FTC) — Draft IT Rules 2026 Introduce CA Verification

 

The Draft Income-tax Rules, 2026 propose an important compliance update for taxpayers claiming Foreign Tax Credit (FTC) — aimed at improving accuracy and documentation standards.

📌 What is Foreign Tax Credit (FTC)?

FTC allows Indian residents earning income abroad to avoid double taxation by claiming credit in India for taxes paid in a foreign country.

⚖ What’s the Proposed Change? — Draft Rule 76

Taxpayers claiming FTC through Form 44 must now obtain verification from a Chartered Accountant.

This verification becomes mandatory when:

✔ The assessee is a company, OR

✔ Foreign tax paid is ₹1 lakh or more

🧾 What the CA Certification Must Confirm

• Income details and supporting records

• FTC eligibility as per DTAA & Income-tax Act provisions

• Proof of foreign tax payment

🎯 Why This Matters

✅ Improves credibility of FTC claims

✅ Reduces disputes and documentation gaps

✅ Encourages structured compliance

✅ Aligns FTC claims with treaty provisions

📢 Practical Impact

Businesses and high-value FTC claimants should plan early for documentation and CA verification to avoid delays in tax filings.

💡 Bottom Line

FTC continues to protect taxpayers from double taxation — but Draft Rule 76 introduces a stronger verification framework for transparency and compliance.