Curious about Income vs. Spending | Red flags!

[superstar@123]

Hey everyone,

I’ve been wondering about a common scenario: how much can someone reasonably spend in a year compared to their income before raising red flags with the tax department?

For example, if someone earns ₹12 lakhs annually but ends up spending over ₹20 lakhs on credit cards, would that trigger an income tax notice questioning how they managed to spend so much?

Now, I understand there's no clear-cut ratio, and it often boils down to common sense and discretion. But I’m really curious to hear if anyone here has received such a notice or knows of someone who did? Any personal experiences or thoughts on overspending and tax scrutiny would be really helpful!

Looking forward to your opinions and stories. 😊

PS: I am not talking about the limit which banks has to report to IT if spends exceed 10 Lacs but I am talking in general keeping this aspect out of this.

 

[HumorSimpson]

@D₹V @SSV @Vasuki

 

[Vasuki]

It's oki because you earn and don't spend everything in a year
Some year u spend more
Some year u don't
1.5 or 2x or even 3x your annual income is ok to spend if you pay tax regularly

 

[Finchamp!]

It is all extremely random! In the non-audit category (i.e. individuals earning less than 50L annually) I know people who have had 1:10 income to spend ratios and yet not received notices. I also know people receiving show cause notices for spending just a few thousands over their income. I have, however, based on my experience noted the following -

1. Salaried individuals are more vulnerable than people drawing professional income
2. Individuals in the audit category, i.e., grossing income of 50L or above, are subject to stricter scrutiny and therefore, more susceptible.

My advice - spend as per your income. If you want to spend more, first earn more.

 

[HumorSimpson]

It is all extremely random! In the non-audit category (i.e. individuals earning less than 50L annually) I know people who have had 1:10 income to spend ratios and yet not received notices. I also know people receiving show cause notices for spending just a few thousands over their income. I have, however, based on my experience noted the following -

1. Salaried individuals are more vulnerable than people drawing professional income
2. Individuals in the audit category, i.e., grossing income of 50L or above, are subject to stricter scrutiny and therefore, more susceptible.

My advice - spend as per your income. If you want to spend more, first earn more.

I expected a poem on this .

 

[Finchamp!]

I expected a poem on this .

In a world of randomness, so absurd,
Where numbers dance, and chaos is stirred,
In non-audit realms, where earnings are low,
Some spend like kings, yet no notices flow.

While others, it seems, with just a small gain,
Face queries and warnings, a puzzling refrain.
From what I've observed, a pattern unfolds,
Salaried folks bear the brunt, truth be told.

The professionals thrive, with fewer concerns,
While those over fifty lakh face tighter returns.
So heed this advice, let your budget align,
Spend as you earn, keep your finances fine.

If luxury calls and your heart yearns for more,
First build up your wealth, then let your dreams soar.


Only for your mate! - @HumorSimpson

 

[HumorSimpson]

In a world of randomness, so absurd,
Where numbers dance, and chaos is stirred,
In non-audit realms, where earnings are low,
Some spend like kings, yet no notices flow.

While others, it seems, with just a small gain,
Face queries and warnings, a puzzling refrain.
From what I've observed, a pattern unfolds,
Salaried folks bear the brunt, truth be told.

The professionals thrive, with fewer concerns,
While those over fifty lakh face tighter returns.
So heed this advice, let your budget align,
Spend as you earn, keep your finances fine.

If luxury calls and your heart yearns for more,
First build up your wealth, then let your dreams soar.


Only for your mate! - @HumorSimpson

Are you real or a bot ? What a poetry