The CBDT Position
CBDT's guidance (late 2025) clarified that credit card reward points earned as a "discount or rebate" on purchases are not taxable as income. Reward points and cashback that are directly tied to eligible spending — effectively a price reduction — fall outside the definition of taxable income for individual taxpayers.
What Remains Ambiguous
Welcome bonuses and milestone benefits that are not tied to a specific purchase (e.g., "5,000 points credited on joining") sit in a grey zone. CBDT's language suggests these could potentially be characterised as income, though no mass enforcement has been announced.
Practical Guidance
For most individuals, reward points from regular card spending are not a tax concern. If you are running a business and claiming credit card rewards as offsetting business expenses, consult a CA. For personal use, continue earning and redeeming points without worrying about tax notices.