I heard that people may receive income tax notices if they spend above a certain amount on their credit cards. I have a few credit cards (UPI-Rupay) that I primarily use for transferring money to a friend (in business) who frequently needs immediate funds. As a result, my credit card transactions are quite high.
What is the limit that I should not exceed for each credit card to avoid receiving a notice from the Income Tax Department? Is this limit calculated on a calendar year basis or a financial year basis? Also, do they consider each credit card separately or the cumulative transaction amount across all cards?
Lastly, what should I do if I receive an income tax notice? I’m feeling quite tense as I have made significant transactions in the past 12 months. Please help.
Basically , it is 10L payments into Credit card duirng a financial year that matters in this case. If it exceeds 10L then it will be reported in AIS.
Then depending upon your itr you may or may not get IT notice..
If your ITR justifies you won't get IT notice.
If you didn't file ITR, then you need to explain the purposes of these transactions and source money and then file an ITR If required. At this time you may need help of a CA.
Don't get worried and at the same time don't do these kind of things..it unnecessarily complicates things and involvement of a CA may be required..
Here is the detailed post I posted for similar query in another thread.
It has all details required..
Mark my post as solution If you feel it answered your query..
Enjoy but be careful ..
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The definition is:
If your
Total Payments into all of the Credit cards held in a Bank crosses more than 10L during a financial year ( 01 April to 31 March) then this will be reported in AIS...
Spends and payments are two different terms.
Spends - the transactions that were settled and billed..
Payments: the bill payments made into a credit card account after the bill is generated (typically) or before the bill is generated if you have habit of paying before bill generation...
Hope you understood the difference here..
Example:
1) You have two cards in 🪓 ..
1. NEO
2. My ZOne:
On NEO - you spent 5 lakhs during FY 23-24 , but paid only 4.5L unitl 31 /03 ( deferring 50K to be paid in April 2024).
On My ZOne: you speent 5.5 lakhs , but paid 5.4 L .. ( deferring 10K to be paid in April 2024)..
Here
Total spends on both the cards: 10.5L ( 5+5.5L)
Total payments made into these two cards: 9.9L ( 4.5L + 5.4L)
In this case nothing will be reported by 🪓 to ITD for AIS purposes, even though your total spends are more than 10L i.e 10.5 L , as your total payments are still under 10L ie. 9.9L..
Enjoy..
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Post in thread 'What get reported to AIS? Spends or Payments?'
https://www.technofino.in/community...d-to-ais-spends-or-payments.29222/post-720195