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A caution to people rotating money using credit cards

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shashiishot2007

shashiishot2007

TF Buzz
I had a lengthy discussion with my CA regarding this topic yesterday. I would request everyone who are rotating money using credit cards to be very careful in this matter.

He told me an interesting story of one of his client whose income was 25lpa but his credit card usage showed 30lpa in his AIS. The client had genuine spends as he was paying bills on belhalf of his company using his credit card and then claiming this amount later afterwards . This means his expenses got mixed up with his company expenses . The client received a notice to explain how he spent more than his income. My CA and his assisstant had to work for 8 days for each and every transaction to explain to the guys in the IT department about which the client expenses are and his company expenses are. They were satisfied with the explanation end of the day and were let off.

So moral of the story is spend/rotate money only if u have the income matching your expenses. So if u earn 10 lpa then spend only 10l using your credit cards. You will receive a notice if ur spending is more than your income. Also it will be very difficult for you and your CA to explain each and every transaction to IT department
 
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Strange said:
But it's not combined spent of two banks right?
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No. For example if u have spent 20L in one year in both hdfc and axis then AIS will show axis separate amount of 10L and hdfc separate amount of 10L. But if u have spent 25 lakh in three separate cards then the cards which have 10L expenses will only show in ais. The third card with 5 Lakh expenses won't show in ais.
 
For anyone earning 25lpa, spending 30 lakhs in a year is not a big deal for him. Also, credit card spends of a particular year can not be tied with income of a certain year.
So, maybe there are some more details to the case which are missing like cash settlement of CC due, or high forex transactions etc. which triggered the scrutiny process.
 
shashiishot2007 said:
I had a lengthy discussion with my CA regarding this topic yesterday. I would request everyone who are rotating money using credit cards to be very careful in this matter.

He told me an interesting story of one of his client whose income was 25lpa but his credit card usage showed 30lpa in his AIS. The client had genuine spends as he was paying bills on belhalf of his company using his credit card and then claiming this amount later afterwards . This means his expenses got mixed up with his company expenses . The client received a notice to explain how he spent more than his income. My CA and his assisstant had to work for 8 days for each and every transaction to explain to the guys in the IT department about which the client expenses are and his company expenses are. They were satisfied with the explanation end of the day and were let off.

So moral of the story is spend/rotate money only if u have the income matching your expenses. So if u earn 10 lpa then spend only 10l using your credit cards. You will receive a notice if ur spending is more than your income. Also it will be very difficult for you and your CA to explain each and every transaction to IT department
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If he was paying on behalf of a company, he must be getting reimbursed to him by company. Fail to understand what was the issue?
 
Tbh this all could be easily avoided on your own too if you maintain a clean record of your dealings with your own company. Problem here isn't 30L spend tbh, problem here is not maintaining a proper record. This is considering CA is telling the whole story and not lying in some way or the other.
 
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