Milestone benefit with Magnus: questions

[Anush]

I understand that we get 25000 points on spends of 1 lakh with Magnus. What happens in the following scenarios?

1. I pay for a refundable flight ticket for a 6 month later flight. The milestone points get credited in 3 months. I transfer the points to a mile/hotel program Then I cancel the flight. What happens?
2. I use the card to pay 'extra' income tax today to get to milestone spend. Then in July, I file my IT return and ask for a refund which is sent to my bank account. Why would anyone not do this? (I understand that money is locked in but the returns on it is far higher than a FD)

 

[Copycat]

I understand that we get 25000 points on spends of 1 lakh with Magnus. What happens in the following scenarios?

1. I pay for a refundable flight ticket for a 6 month later flight. The milestone points get credited in 3 months. I transfer the points to a mile/hotel program Then I cancel the flight. What happens?
2. I use the card to pay 'extra' income tax today to get to milestone spend. Then in July, I file my IT return and ask for a refund which is sent to my bank account. Why would anyone not do this? (I understand that money is locked in but the returns on it is far higher than a FD)

For 2, you do know that the interest is only applicable from April 1st onwards, right?. So unless you pay the extra tax in March, you lose out on interest. Though I confess, I was going to do the same thing in March 🙂 if I did not hit the milestone

Also, take care of the 10% rule: https://incometaxindia.gov.in/_layo...-tax act, 1961/2018/102120000000071239.htm&k=
The refund amount must be greater than 10% of the total amount you are taxed, else no interest on refund

 

[sam609619]

How do we pay income tax through credit card ,
I dont get that option .

 

[Copycat]

How do we pay income tax through credit card ,
I dont get that option .

From here: https://www.incometax.gov.in/iec/foportal/. Choose EPay tax and then go on till you reach the screen shown below

Choose the Payment gateway option. Take KMB

 

[Anush]

For 2, you do know that the interest is only applicable from April 1st onwards, right?. So unless you pay the extra tax in March, you lose out on interest. Though I confess, I was going to do the same thing in March 🙂 if I did not hit the milestone

Also, take care of the 10% rule: https://incometaxindia.gov.in/_layouts/15/dit/mobile/viewer.aspx?path=https://www.incometaxindia.gov.in/acts/income-tax act, 1961/2018/102120000000071239.htm&k=
The refund amount must be greater than 10% of the total amount you are taxed, else no interest on refund

Oh. I am not even worried about the interest from IT department. I am talking about earning points by paying advanced tax(which will be converted to money) versus leaving the money in an FD

But the crux of my post is to ask if I am missing anything in the 2 scenarios.

 

[sam609619]

From here: https://www.incometax.gov.in/iec/foportal/. Choose EPay tax and then go on till you reach the screen shown below

Choose the Payment gateway option. Take KMB
View attachment 6926

Thnks

 

[adi]

In first scenario bank can reverse points. if your points balance is 0 thn it will become negative.

 

[Copycat]

Oh. I am not even worried about the interest from IT department. I am talking about earning points by paying advanced tax(which will be converted to money) versus leaving the money in an FD

But the crux of my post is to ask if I am missing anything in the 2 scenarios.

For 2, I agree. It would work. As I said, I was going to do it too, if required. I was only responding to the part of your statement that said the return was better than an FD

For 1, I do not know what would happen. You could try it once I guess without the bank getting suspicious. I do not know much about airline tickets, but i think a) Some sites ask you to pay a smallish premium which is non-refundable when you cancel the ticket b) Some airlines offer a credit note instead of a refund c) Some airlines ask you to back up the cancellation reason with documents. As I said, I do not know much. These 3 points I mentioned were just from a Google search 5 minutes ago

 

[Wealth is my birth right!]

I understand that we get 25000 points on spends of 1 lakh with Magnus. What happens in the following scenarios?

1. I pay for a refundable flight ticket for a 6 month later flight. The milestone points get credited in 3 months. I transfer the points to a mile/hotel program Then I cancel the flight. What happens?
2. I use the card to pay 'extra' income tax today to get to milestone spend. Then in July, I file my IT return and ask for a refund which is sent to my bank account. Why would anyone not do this? (I understand that money is locked in but the returns on it is far higher than a FD)

My 2 cents
Scenario 1 once ur card statement gets reversed for ticket cancellation automatically rewards will be debited even ur edge is zero it will go negative
Scenario 2 yes it’s workable but keep it in mind that since IT dept got ur money already they can deduct all applicable tax things happily (which we generally hide to the best lol)
For point 2 have a precaution of the below:
26AS
AIS
SFT

 

[Copycat]

My 2 cents
Scenario 1 once ur card statement gets reversed for ticket cancellation automatically rewards will be debited even ur edge is zero it will go negative
Scenario 2 yes it’s workable but keep it in mind that since IT dept got ur money already they can deduct all applicable tax things happily (which we generally hide to the best lol)
For point 2 have a precaution of the below:
26AS
AIS
SFT

2 works for me 'cos I don't hide anything. I pay tax on all interest (savings, fd, po, all small savings, etc). What really irritates me is that I calculate accrued interest every single year and pay tax on that. And the rotten post office calculates interest only at maturity and posts the same in AIS/SFT. I assume that sooner or later, I'll get a query about that. Hopefully, it doesn't matter though as I've been calculating accrued interest and paying tax on that ever since I can remember (and I have a running record)

P.S. If they want to deduct tax there is nothing you can do. Whether you prepay or don't, in both cases you will have to reply to their demand. And if they accept your reply you'll get the refund with interest. If they don't accept your reply then I guess having prepaid is better, else you will have to pay penal interest

P.P.S. Don't hide anything. For your own peace of mind. If you work in the tech domain, you will understand there is no way you can hide anything. And they can re-open past years' assessments

 

[Wealth is my birth right!]

2 works for me 'cos I don't hide anything. I pay tax on all interest (savings, fd, po, all small savings, etc). What really irritates me is that I calculate accrued interest every single year and pay tax on that. And the rotten post office calculates interest only at maturity and posts the same in AIS/SFT. I assume that sooner or later, I'll get a query about that. Hopefully, it doesn't matter though as I've been calculating accrued interest and paying tax on that ever since I can remember (and I have a running record)

P.S. If they want to deduct tax there is nothing you can do. Whether you prepay or don't, in both cases you will have to reply to their demand. And if they accept your reply you'll get the refund with interest. If they don't accept your reply then I guess having prepaid is better, else you will have to pay penal interest

P.P.S. Don't hide anything. For your own peace of mind. If you work in the tech domain, you will understand there is no way you can hide anything. And they can re-open past years' assessments

Yes I know a guy who got query after 8 financial years on an overseas spend
Thanks for the inputs
Fact Reg po why not I settle tax on maturity when they report

 

[Copycat]

Yes I know a guy who got query after 8 financial years on an overseas spend
Thanks for the inputs
Fact Reg po why not I settle tax on maturity when they report

You can do it that way too. Both are allowed: https://www.livemint.com/news/india...on-interest-is-calculated-11652002198592.html
In my case, I have been paying tax right from the 2nd year of the PO scheme. So specifically in my case, I have already paid the tax on interest in all preceding years

P.S. I believe the accrual way is the more correct way and this is borne out by this (plus many others)

NSC: Is the interest earned on NSCs taxed on annual or accrual basis?

The interest accrued is deemed to be reinvested on behalf of the NSC holder each year and you need to declare this interest income.

economictimes.indiatimes.com

I am just not sure why the PO is doing it only at maturity. Stupid shortcutters 🙂
My guess is they will change it soon. They are slowly updating their systems and very soon they'll have the capability to report on an accrual basis

 

[Avijeet]

I understand that we get 25000 points on spends of 1 lakh with Magnus. What happens in the following scenarios?

1. I pay for a refundable flight ticket for a 6 month later flight. The milestone points get credited in 3 months. I transfer the points to a mile/hotel program Then I cancel the flight. What happens?
2. I use the card to pay 'extra' income tax today to get to milestone spend. Then in July, I file my IT return and ask for a refund which is sent to my bank account. Why would anyone not do this? (I understand that money is locked in but the returns on it is far higher than a FD)

I will not do both .... I will refrain myself from doing this ...
1. Not gonna over-smart my bank to a level at which they will tag me with a RED FLAG ...
2. Not gonna play around with Income Tax (Again not to the extreme level). The repucation can be deep and grave... and the risk is not worth it.

 

[Wealth is my birth right!]

You can do it that way too. Both are allowed: https://www.livemint.com/news/india...on-interest-is-calculated-11652002198592.html
In my case, I have been paying tax right from the 2nd year of the PO scheme. So specifically in my case, I have already paid the tax on interest in all preceding years

P.S. I believe the accrual way is the more correct way and this is borne out by this (plus many others)

NSC: Is the interest earned on NSCs taxed on annual or accrual basis?

The interest accrued is deemed to be reinvested on behalf of the NSC holder each year and you need to declare this interest income.

economictimes.indiatimes.com

I am just not sure why the PO is doing it only at maturity. Stupid shortcutters 🙂
My guess is they will change it soon. They are slowly updating their systems and very soon they'll have the capability to report on an accrual basis

Yes after I posted my previous reply just did a mind math if we pay at 5th year maturity of deposit the applicable tax as per post office practice there are chances to get penalized by IT dept is supposed I withdraw interest in all previous FYs the interest but not paid tax on that FY
U r a smarty guy🤗