Used company credit card for personal stuff — will this show up as taxable salary?

Question

Hi everyone, I'm Deepa, working in a mid-size IT firm in Pune, drawing around ₹92k in hand. My company gives us a corporate credit card mainly for client entertainment and travel. Last few months I got a bit careless and used it for some personal purchases too — groceries, one Amazon order, a flight ticket for a family trip. Total maybe around ₹18-20k of personal expenses over 3-4 months. I did repay most of it back to the company but not immediately, there was a delay of 6-8 weeks sometimes.

Now my CA friend casually mentioned that if company pays for personal stuff it can be treated as a 'perquisite' and added to your taxable salary. I got a bit scared. Is this actually enforced? Will this show up in my Form 16? Does it depend on whether I repaid or not? Our HR has not said anything so far but I'm worried about ITR filing for FY 2025-26. Anyone faced this situation before?

Answer 1

Honestly, your CA friend is right and this is something most salaried employees don't realise until it bites them.

Under the Income Tax Act, any personal expense paid by your employer — directly or through a company credit card — qualifies as a perquisite under Section 17(2). It gets added to your gross salary and taxed accordingly. The key word is 'paid by employer.' If the company settles that credit card bill and it includes your personal spends, that amount is technically a perk in your hands.

Now here's where your situation gets a bit more nuanced. You said you repaid the amount. That actually matters. If you've reimbursed the company for the personal expenses, most tax officers will treat it as if no benefit was actually received by you. The perquisite valuation is generally done on a net basis — benefit received minus amount paid back by employee. So if you repaid fully, your taxable perquisite could be zero or minimal.

The problem is the delay. 6-8 weeks of float where company money was essentially funding your personal life — technically that's an interest-free loan from the employer, which is ALSO a perquisite under Rule 3(7)(i). But honestly, for ₹18-20k over a few months, the taxable value of that notional interest is going to be maybe ₹200-400 max. Not worth losing sleep over.

What you should actually do right now:
1. Get a clear statement from your company's accounts team showing what personal expenses were on the card and confirm your repayments are logged.
2. Ask your HR or payroll team whether they've included any perquisite value in your Form 16 for this. Most smaller IT firms don't bother tracking this unless amounts are large.
3. If Form 16 doesn't show it and you've repaid, you're probably fine — but keep those repayment records (bank transfer receipts, expense reports) for at least 6 years in case of scrutiny.

One thing people get wrong: they assume because HR didn't say anything, there's no tax issue. HR and payroll are often sloppy about perquisite reporting. The liability is still yours as the employee.

My recommendation — get those repayment proofs in order, confirm with HR that the amounts are settled in company books, and file your ITR normally. If any amount genuinely wasn't repaid, declare it as perquisite yourself. Voluntary disclosure is always cleaner than getting a notice later.

Answer 2

I'll push back a little on the 'you're probably fine' take here.

Yes, repayment reduces the perquisite value. But the part people skip over is — who decides whether the repayment happened 'in time'? The Income Tax Rules don't give you a 6-8 week grace period. Technically the perquisite crystallises when the benefit is enjoyed. Your repayment later is a separate transaction.

I've seen cases where during an employer tax audit, the TDS officer asks the company to explain why certain card expenses weren't included in employee perquisite calculations. The company then gets a demand. They pass it on to you. Suddenly you have a tax shortfall for FY 2025-26 even though you thought everything was settled.

Here's what I'd actually suggest differently from what others might tell you — proactively talk to your payroll or finance team and ask them to formally record these as 'employee recoveries' against personal card use. Get it documented in writing. This paper trail is what protects you if there's ever a TDS reconciliation question.

Also check your company's expense policy document. Many companies now explicitly state that personal use of corporate cards, even if repaid, is a policy violation. HR staying quiet doesn't mean they won't act if audit season comes.

₹18-20k is small but corporate card misuse flags are becoming more common with GST audit trails and banking data matching under AIS now. Your Annual Information Statement for FY 2025-26 is going to be more detailed than ever.

Repay everything, document it, and don't do this again. That's the only clean way out.