 "Credit cards in 2025: Tax clarity, RBI rules and a shift in spending")
India’s credit card landscape in 2025 was shaped less by headline-grabbing policy changes and more by a steady recalibration of how consumers spend, borrow and pay. Clearer taxation under GST 2.0, tighter RBI norms and rapid digital adoption together nudged card usage towards more planned, transparent and frequent transactions.
GST clarity boosts confidence, not costs
The rollout of GST 2.0 in September brought greater certainty around pricing, which quickly reflected in spending behaviour.
“The rollout created a clearer and more efficient tax framework, which boosted consumer confidence and translated into actual spending behaviour,” said Ravindra Rai, managing director and chief executive officer, BOBCARD Limited.
According to him, credit card transactions surged immediately after implementation as users converted festive sentiment and tax clarity into purchases.
For self-employed professionals and small businesses, clearer tax treatment made credit cards more attractive for managing day-to-day expenses and working capital, reinforcing their role in formal digital finance.
From impulse buys to planned spending
Across issuers, 2025 saw a shift towards value-led, planned usage.
BOBCARD customers increasingly timed big-ticket purchases around festival offers, EMIs and rewards, Rai noted, using cards to manage cash flows rather than merely defer payments.
A similar pattern emerged in premium segments.
“Spending shifted toward planned, milestone-led transactions, especially during festive, travel and sale periods,” said Harshita Singh, business head, Times Black ICICI Card. Categories such as travel, dining and premium retail saw higher traction, reflecting a growing preference for curated experiences over routine consumption.
Digital-first habits go mainstream
Digital adoption accelerated sharply during the year.
“Online spends now contribute 62.5 per cent of total retail spends,” said Salila Pande, managing director and chief executive officer, SBI Card, citing the company’s data from the first half of financial year 2026. Travel, hospitality and electronics led discretionary spends, with categories such as hotels, airlines and restaurants recording 79 per cent year-on-year growth in Q2 FY26, supported by a surge in digital transactions.
Cards are also being used more frequently for smaller-ticket payments, aided by wider acceptance and UPI-linked credit, particularly in Tier-II and Tier-III cities. UPI-linked card spends grew 16 per cent in Q2 FY26 for SBI Card, Pande said, highlighting how UPI is complementing, not replacing, credit cards.
Costs, compliance and discipline
Greater GST visibility has made users more cost-aware.
“Consumers are more conscious of the total cost of card usage, as GST on fees, interest and EMI-related charges is now more visible,” said Avinash Godkhindi, managing director and chief executive officer, Zaggle. Late fees and revolving credit are increasingly seen as punitive, encouraging timely repayments.
At the same time, RBI-led transparency and tighter GST compliance have improved record-keeping and expense discipline, especially for business users.
Looking ahead to 2026
Experts expect further progress towards simpler pricing, better digital integration and personalised rewards. As compliance and innovation align, credit cards are increasingly evolving into predictable, transparent financial tools rather than impulse-driven credit options.