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A card for high monthly spends like 5/6 Lakh (Online)

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rdargar

rdargar

TF Select
I spend close to 5-6 Lakh online per month (Across 3-4 merchants)
Recently got into the CC game and got Magnus 3 months back and now no value.
Which is the best alternative now ?

Additional Info:
  • None of the spends are on Amz/Fkart or any other popular channel
  • The merchant charges me 1.8% Extra for per transaction
  • Expenses are of personal in nature including Vehicle EMI etc.
  • Have current limit of 08 Lakh per month on cards (3.1 on Axis cards , 8 on ICICI Amz)
  • Amex is not servicable
  • Not looking for CashBack Card
  • Self - Employed

Approximate Breakup:
  • 4 Lakh Vehicle EMI per month on a local used car dealer(for next 24 Months) (two vehicle is for relative and one is for me)(online)(Adhoc of 1.8%)
  • 1 Lakh approx Groccery + Misc. expenses (Across 2-3 merchants all offline/online) (They also charge an ad-hoc of 2% 🙂
  • 1.5 - 2 Lakh on Construction Material (For new house constuction for foreseeable 1 year)
 
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rdargar said:
For an properitor any income of his/his firm is of the individual.
Cashback although not being a direct income but it still is offsetting your expenses.
Let say that the car is registered under individual name and is also being reflected in the Firm's BS than you have to mandatorily deduct any concession/kind received in any form from the cost of the asset.
eg Car worth 10L and 50k cashback resulting from this purchase than the car value is INR 9.5L(Other way is to directly recongnise the 50K in profit).
This deduction will further reduce other factors such as dep and henceworth Tax Payable.
So directly or indirectly the Cashback earned is Taxable unless you hide the fact that your received the cashback which will be ok for now but will be worse than savings if any scrutiny comes in the future.
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That's true if you want to avail Tax deduction by showing car as business expense, where actual amount of the purchase is only deductible so even if you pay 10L and get ,50K as cashback then you only have spent 9.5L, hence 50K cashback is not to be considered for tax break.

For an individual though, Let's say, I have taxable income of 25L post all standard deductions and salary is the only income I have, my tax liability is say 7L for simplicity, and I spent 3L for that year as my normal expense and save 15L for that FY , now let's consider 2 scenarios:

1. Purchase a car of 10Land get 50K as cashback. The net savings I have post car payment is 15L - 10L + 50K = 5.5 L

2. Purchase the same car , but insist dealer to give upfront discount of 50K instead of any cashback, so car is bought for 9.5L now and my net savings are 15L- 9.5L= 5.5L

Are you saying in scenario 1, I am liable to pay taxes on 50K even though my net savings are same? And for scenario 2 , there won't be any additional tax?

If that's the case then isn't this a classic example of double taxation?
 
Akshays said:
That's true if you want to avail Tax deduction by showing car as business expense, where actual amount of the purchase is only deductible so even if you pay 10L and get ,50K as cashback then you only have spent 9.5L, hence 50K cashback is not to be considered for tax break.

For an individual though, Let's say, I have taxable income of 25L post all standard deductions and salary is the only income I have, my tax liability is say 7L for simplicity, and I spent 3L for that year as my normal expense and save 15L for that FY , now let's consider 2 scenarios:

1. Purchase a car of 10Land get 50K as cashback. The net savings I have post car payment is 15L - 10L + 50K = 5.5 L

2. Purchase the same car , but insist dealer to give upfront discount of 50K instead of any cashback, so car is bought for 9.5L now and my net savings are 15L- 9.5L= 5.5L

Are you saying in scenario 1, I am liable to pay taxes on 50K even though my net savings are same? And for scenario 2 , there won't be any additional tax?

If that's the case then isn't this a classic example of double taxation?
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The cashback will be irrelevnt in the case of a purchas/expense when an individual earning only from salary income.
However afaik this cashback since it can derive a monetary value directly or indirectly it is still considered an income and it will fall under IFOS -Gift Section.
And as per ITAct gift above 50k are taxable , so assuming that Cashback amount is greater than 50k for any indivdual be salaried or self employed should ideally be declared and paid tax upon . However most of the individuals are ignorant about the fact and don't care about this situation.


And for your examples first I would like to highlight that Income Tax is charged on your income and not the Savings/Expenses (The case I talked about was of business hense expenses were neccessary for deriving income which is not for salaried)you seemed to have mixed CB and Trade Discount : if the dealer is providing 50k upfront than it is a discount and hence bringing down the value of invoice itself so you are not having a new income so no taxes (Unless it was a complete gift that is a whole different scenerio) ; whereas in first case although it is offsetting an other expense you cannot claim it so it is a peronal expense and hence that cashback is another income and hence indeed taxable.

For sake of simplicity:
You paid INR 10L for a 15L car : IT don't attract as they don't pay any heed to how you use your money
You paid INR 15L for a 15L car but received 1L cashback : 1L is income and must be taxed (exception if business )as it income.

(The above infomartion is upto best of my knowledge)
 
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Also take a look at kotak white cc, it will give you a cashback of Rs 27k on spends of Rs 12 Lakhs in an anniversary year.
 
rdargar said:
I spend close to 5-6 Lakh online per month (Across 3-4 merchants)
Recently got into the CC game and got Magnus 3 months back and now no value.
Which is the best alternative now ?

Additional Info:
  • None of the spends are on Amz/Fkart or any other popular channel
  • The merchant charges me 1.8% Extra for per transaction
  • Expenses are of personal in nature including Vehicle EMI etc.
  • Have current limit of 08 Lakh per month on cards (3.1 on Axis cards , 8 on ICICI Amz)
  • Amex is not servicable
  • Not looking for CashBack Card
  • Self - Employed

Approximate Breakup:
  • 4 Lakh Vehicle EMI per month on a local used car dealer(for next 24 Months) (two vehicle is for relative and one is for me)(online)(Adhoc of 1.8%)
  • 1 Lakh approx Groccery + Misc. expenses (Across 2-3 merchants all offline/online) (They also charge an ad-hoc of 2% 🙂
  • 1.5 - 2 Lakh on Construction Material (For new house constuction for foreseeable 1 year)
Click to expand...
How are you paying vehicle EMIs through credit card? Aren't EMIs paid through e-mandate directly through bank account?
 
amitr29 said:
Magnus is the still the best. You get 12/200 upto 1.50 lac and 35/200 for rest 4.50 lacs. Total points 36000

Open a Burgundy account and get 28,800 miles or Accor points. Nothing can beat it still. Continue till it's further downgraded

All this without any Grabdeals or Gyftr
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For those spending more than 1.5 lakhs per calendar month using Magnus burgundy to get 35 points on 200 , is there any scrutiny or notice asking for the invoices and bills ?
 
drsel said:
For those spending more than 1.5 lakhs per calendar month using Magnus burgundy to get 35 points on 200 , is there any scrutiny or notice asking for the invoices and bills ?
Click to expand...
No notices at all for Magnus spends, subject to one doing genuine spends
 
You may want to distribute your spends over:
1. SBI Air India Signature till 20L spends: gives about 10% Air India miles
2. Axis Magnus Burgundy for the rest
 
to clarity on the tax topic:
If one gets air miles, the same won't be chargeable to tax since:
-Their fair value can't be determined and thus, can be said to not have any value since they might lapse
-Any reduction in the price of a ticket can be considered to be a discount - if used for business | profession, one should ideally claim deduction of the monetary value paid as an expense
 
amitr29 said:
No notices at all for Magnus spends, subject to one doing genuine spends
Click to expand...
For spends over 1.5 lakhs using Magnus Burgundy, 12 points per Rs.200 come after 5 days.

But when are the bonus 23 points per 200 given on spends above 1.5 lacs?
 
drsel said:
For spends over 1.5 lakhs using Magnus Burgundy, 12 points per Rs.200 come after 5 days.

But when are the bonus 23 points per 200 given on spends above 1.5 lacs?
Click to expand...
It will take upto 45 days. Usually, by 15th of the next month they credit points
 
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