Income tax notice for credit card spends..

[Sudip]

folks, i think i am in trouble. I had a few questions and tried searching through the site and this thread but none really answered so please forgive if something is getting duplicated by me:

i thought i was on top of it but a few spends later i realized I have ended up spending more than 10lakhs on my Axis Bank Credit Cards. (Since axis owns citi cards now, I am guessing citibank card spends will get added to axis bank card spends and get totalled together for the 10lakh limit?).

Me and my wife are self-employed as partners in a partnership that runs a non-gst (since we have <40l turnover) registered trading business. Both of us take salaries out of it. My personal salary and only source of income is between 4-5 lakhs per annum for which ITR is filed.

In the 10+ lakh spends on axis credit cards, 90% spends were for my business. The business from its current account used to pay directly into the personal credit card every month all the dues for the spends that were made on behalf of the business. I have all the records for every transaction done on behalf of the business and the payment dates.

I have stopped using both my axis and citibank credit cards till end of this financial year. Unfortunately there are a few emi spends on the axis card which will keep showing up every month till march.

Now, Financial Year 2023-2024 has not yet ended but eventually this will definitely get reported in AIS. The few questions I had:

Q1) I don't know if I will get a notice, but if I do I just want to know how can I explain the discrepancy between my personal income and the card spend. One of the replies in this thread talked about business paying personal credit card should be declared as personal income? Didn't understand it exactly.

Q2) Has anyone got a notice here? If one receives it and now they would want to know everything, does it ask one to disclose all other bank cards held and payments done on them as well? Then my total spends across all banks will cross even 20 lakhs.

Q3) Is there any accounting practice I can implement immediately to provide a better explanation when the return is filed for this financial year?

Q4) Should i continue my business spends on other non-axis non-citi credit cards to continue earning the rewards/points, or stop altogether for this financial year or permanently?

Thank you to everyone who reads this post for your valuable time. I really appreciate it and even more grateful to those who will reply.

I may be disgraceful here, but honestly folks like you are the real poison to genuine credit card holders who ultimately suffers the loss due to devaluation.

You must have taken business credit card!

 

[Zacobite]

folks, i think i am in trouble. I had a few questions and tried searching through the site and this thread but none really answered so please forgive if something is getting duplicated by me:

i thought i was on top of it but a few spends later i realized I have ended up spending more than 10lakhs on my Axis Bank Credit Cards. (Since axis owns citi cards now, I am guessing citibank card spends will get added to axis bank card spends and get totalled together for the 10lakh limit?).

Me and my wife are self-employed as partners in a partnership that runs a non-gst (since we have <40l turnover) registered trading business. Both of us take salaries out of it. My personal salary and only source of income is between 4-5 lakhs per annum for which ITR is filed.

In the 10+ lakh spends on axis credit cards, 90% spends were for my business. The business from its current account used to pay directly into the personal credit card every month all the dues for the spends that were made on behalf of the business. I have all the records for every transaction done on behalf of the business and the payment dates.

I have stopped using both my axis and citibank credit cards till end of this financial year. Unfortunately there are a few emi spends on the axis card which will keep showing up every month till march.

Now, Financial Year 2023-2024 has not yet ended but eventually this will definitely get reported in AIS. The few questions I had:

Q1) I don't know if I will get a notice, but if I do I just want to know how can I explain the discrepancy between my personal income and the card spend. One of the replies in this thread talked about business paying personal credit card should be declared as personal income? Didn't understand it exactly.

Q2) Has anyone got a notice here? If one receives it and now they would want to know everything, does it ask one to disclose all other bank cards held and payments done on them as well? Then my total spends across all banks will cross even 20 lakhs.

Q3) Is there any accounting practice I can implement immediately to provide a better explanation when the return is filed for this financial year?

Q4) Should i continue my business spends on other non-axis non-citi credit cards to continue earning the rewards/points, or stop altogether for this financial year or permanently?

Thank you to everyone who reads this post for your valuable time. I really appreciate it and even more grateful to those who will reply.

Simple answer - the truth is what you need to show.. Its not illegal to use personal cards for business as yet.. Its just not allowed by banks and their T&C.. Get a good CA and show actual as is.. You MAY get a query.. its a big? Declare everything clearly in your personal and business IT Return.. wont be a problem.. and yes.. stop using personal card for biz exp.. get a biz cc.. they are easy to get nowadays.. Any shortcut you try to avoid will land u in bigger trouble later.. and. may impact your business rating as well.. 5L.mismatch is not so big.. Manageable..

 

[Heisenberg37]

i want to calculate:
I paid 80000 as advance tax
I pay 3L for ulip yearly which is tax exempted
How much will be my total income?

I don’t know how to calculate that
@SSV help!

 

[SSV]

i want to calculate:
I paid 80000 as advance tax
I pay 3L for ulip yearly which is tax exempted
How much will be my total income?

I don’t know how to calculate that
@SSV help!

We can’t calculate Total Income with the above data

 

[HumorSimpson]

i want to calculate:
I paid 80000 as advance tax
I pay 3L for ulip yearly which is tax exempted
How much will be my total income?

I don’t know how to calculate that
@SSV help!

Heisenberg uncertainity.
🙀

 

[Zacobite]

i want to calculate:
I paid 80000 as advance tax
I pay 3L for ulip yearly which is tax exempted
How much will be my total income?

I don’t know how to calculate that
@SSV help!

returns on above 2.5 L premium ulip is not tax exempt

 

[Heisenberg37]

We can’t calculate Total Income with the above data

Tax paid is 80000
Only exemption is ulip which i pay 3L yearly
No other exemptions.
So will my itr be above 10L or below?

 

[samm255]

Tax paid is 80000
Only exemption is ulip which i pay 3L yearly
No other exemptions.
So will my itr be above 10L or below?

You just changed the last line from your previous comment so I don't think @SSV would still able to help you.

 

[RAMESH BABU N]

Surprised to read this funny thread. Silly n funny.

None can help, except OP himself.

How can any outsider tell him what is his/her total income ? Illogical n irrelevant to do so.

Guys like OP need to do the following :

1. Read about ITR categories.
2. Download the applicable ITR format applicable for.
3. Read the relevant instructions.
4. Start filling the ITR with details n financial data by listing all income streams from all sources.
5. Download TRACES. Co-relate it.
6. Do the calculations.
7. ARRIVE at total incomes, taxable incomes, tax liability, taxes paid n payable.

Adults should behave like responsible adults. Not like schoolgoing kids. More so, if they are paying 80K taxes - as claimed.

 

[sidp]

Tax paid is 80000
Only exemption is ulip which i pay 3L yearly
No other exemptions.
So will my itr be above 10L or below?

Dude how can someone find out your total income? Total income is all the money you have earned in the financial year. Salary, investment earning, business earning, proceeding from property sell, interest, rent charged, agri related income etc.

And your ulip is taxable as it is >2.5L. You have already paid some tax, rest you have to pay. You dont have yo calculate it, once you input your data,it will automatically show how much you need to pay.

 

[HumorSimpson]

Dude how can someone find out your total income? Total income is all the money you have earned in the financial year. Salary, investment earning, business earning, proceeding from property sell, interest, rent charged, agri related income etc.

And your ulip is taxable as it is >2.5L. You have already paid some tax, rest you have to pay. You dont have yo calculate it, once you input your data,it will automatically show how much you need to pay.

Read his username. Heisenberg uncertainty principle.

 

[Zacobite]

Read his username. Heisenberg uncertainty principle.

he is trying to avoid too much information.. but unfortunately without all data.. answering this Q is not possible.. Out of. syllabus 🙂

 

[sidp]

he is trying to avoid too much information.. but unfortunately without all data.. answering this Q is not possible.. Out of. syllabus 🙂

Read his username. Heisenberg uncertainty principle.

He is playing jeopardy. 😁

 

[HumorSimpson]

he is trying to avoid too much information.. but unfortunately without all data.. answering this Q is not possible.. Out of. syllabus 🙂

Insufficient data .

 

[Deleted member 9785]

By when will we see AIS reporting for last year?

 

[Alex292929]

If someone files an ITR under the Presumptive Taxation Scheme for business income (PGBP head) with a revenue of ₹50 lakhs and reports a profit of ₹4 lakhs, which is 8% (including cash transactions), and the AIS shows SFT for credit card transactions amounting to ₹10 lakhs, is it correct to assume that expenses up to ₹46 lakhs can be shown? Am I missing anything?

 

[RAMESH BABU N]

If married, ask your wife.
If not yet, ask your HR Dept, if employed.
If not married n not yet employed, ask your parents.

 

[Alex292929]

Thanks for the stellar advice!
But next time, maybe stick to answering queries instead of trying to be cool.

 

[RAMESH BABU N]

Thanks for the stellar advice!
But next time, maybe stick to answering queries instead of trying to be cool.

Answering is exactly not difficult if the question is answerable. If the question is itself silly (and certainly unanswerable), the best thing to do is be cool.

If not, how can anyone arrive at the total income based on 80K advance tax paid ?

For such funny situations, always try to be cool or try to be extra cool.

 

[chasni]

In my opinion, income in a year doesn't have anything to do with spend in a year.

Lets say someone has been working for 10 years and earns X lacs a year but in a particular year, he ends up spending 1.4X on credit card due to some reason. Would he still be considered for notice for tax evasions?

All IT tax notices are sent to uncover tax evasions through undisclosed income but not to select people who are spending more on cards. There might many more metrics being used to send notices, not just income > card spend.

If you're doing CC to CC rotation then save the proofs and set some money aside for CA for future.

Lastly as per my knowledge, all notices can be sent up only up to 3 years after AY, except for cases where the suspected undisclosed income is more than 50 lacs.