Income tax notice for credit card spends..

[gurbina]

By to some account I am sure he meant someone/pan with no income. So they would stay under the 5/7.5L limit and you can claim HRA deduction on the transferred amount.

I thought so too, but who would knowingly commit tax evasion? There's better ways, unethical ones but legal.

Also I guess he meant "someone/individual" instead of accounts. I can have an account with 0 income and transfer money to myself there, it doesn't take away any tax liabilities.

People need to understand better what they're doing, we've got even ChatGPT nowadays to help you cheat or answer questions. While I am against unethical/illegal tricks, I do also understand why people do it. So at least if you're gonna do it, make sure you do it right.
Getting into trouble for dumb things is NOT fun and can be very time consuming, stressing and even expensive; specially tax related. The only reason why we see this many people trying to pull dumb tricks is because IT is still a few years behind (you could still be audited for previous years) but they're catching up, fast.

 

[anirban.choudhuryanirban.choudhury is verified member.]

This doesn't make any sense. How would you be saving any IT and TDS?

I would rephrase the entire thing again
What I meant was
Pay Fake Rent to someone’s account with no income , pay in batch of 45k per month that for a total of about 5 lakhs per annum as per the available free tax zone of that person.
My point was that there are multiple ways of doing such stunts which shouldn’t cause any tax evasion or scrutiny by IT.

It’s just that , if someone does it few time in situation of some immediate financial crisis then it’s of, but it’s very difficult to get some capital gain or gains in form of reward points using this , so it’s best to be skipped

 

[TheMentalist]

I would rephrase the entire thing again
What I meant was
Pay Fake Rent to someone’s account with no income , pay in batch of 45k per month that for a total of about 5 lakhs per annum as per the available free tax zone of that person.
My point was that there are multiple ways of doing such stunts which shouldn’t cause any tax evasion or scrutiny by IT.

It’s just that , if someone does it few time in situation of some immediate financial crisis then it’s of, but it’s very difficult to get some capital gain or gains in form of reward points using this , so it’s best to be skipped

Even if you pay like this to someone else, then that "someone" won't have to pay tax, but you would have to show the income supporting these payments and also pay tax on this income

 

[gurbina]

I would rephrase the entire thing again
What I meant was
Pay Fake Rent to someone’s account with no income , pay in batch of 45k per month that for a total of about 5 lakhs per annum as per the available free tax zone of that person.
My point was that there are multiple ways of doing such stunts which shouldn’t cause any tax evasion or scrutiny by IT.

It’s just that , if someone does it few time in situation of some immediate financial crisis then it’s of, but it’s very difficult to get some capital gain or gains in form of reward points using this , so it’s best to be skipped

Wait until you get audited and have to show signed receipts and rent agreement. Just doing a rental payment via a platform does not give any legitimacy to it.

Without these documents your rental payments are no good. I've read there's even cases where they might ask for proof that the property exists in the case of audits like electricity receipts, property deed from landlord, etc.

Also for any rental payment tax exemption requires PAN from both sides if they exceed 1L per year. Also the other person receiving the payment MUST report this income and payments. You will also be leaving a trail that you're getting that rental payments back.

It is a whole lot of trouble to help a "friend" to save on income tax which can only end up badly.

It's like being cosigner for a loan, if things go sideways he's not gonna get spared.

 

[anirban.choudhuryanirban.choudhury is verified member.]

Wait until you get audited and have to show signed receipts and rent agreement. Just doing a rental payment via a platform does not give any legitimacy to it.

Without these documents your rental payments are no good. I've read there's even cases where they might ask for proof that the property exists in the case of audits like electricity receipts, property deed from landlord, etc.

Also for any rental payment tax exemption requires PAN from both sides if they exceed 1L per year. Also the other person receiving the payment MUST report this income and payments. You will also be leaving a trail that you're getting that rental payments back.

It is a whole lot of trouble to help a "friend" to save on income tax which can only end up badly.

It's like being cosigner for a loan, if things go sideways he's not gonna get spared.

I am not sure about the technicalities , but it does sound scary as per the information provided above. Well I have never used cc for rent payments , but I do know a few who have been doing this for years now , without any notice from IT and even earning handsome reward points against it easily

 

[akshayhs]

u can save CA charges too

Oh, he will definitely need a CA this year.

 

[kushhh]

What is the case , if i have done some high value education payments?

 

[sgoyal9]

I am not sure about the technicalities , but it does sound scary as per the information provided above. Well I have never used cc for rent payments , but I do know a few who have been doing this for years now , without any notice from IT and even earning handsome reward points against it easily

I think the point is to not use it for fake rent payments.

For normal rent payments, you should be getting a proper receipt from your landlord as well as have different PANs for both parties involved.

 

[Zacobite]

Wait until you get audited and have to show signed receipts and rent agreement. Just doing a rental payment via a platform does not give any legitimacy to it.

Without these documents your rental payments are no good. I've read there's even cases where they might ask for proof that the property exists in the case of audits like electricity receipts, property deed from landlord, etc.

Also for any rental payment tax exemption requires PAN from both sides if they exceed 1L per year. Also the other person receiving the payment MUST report this income and payments. You will also be leaving a trail that you're getting that rental payments back.

It is a whole lot of trouble to help a "friend" to save on income tax which can only end up badly.

It's like being cosigner for a loan, if things go sideways he's not gonna get spared.

Also, With the new IT system of AIS and Special transactions, pls. be assured that 10 L. limit will drop very soon. Everyspend of notable value will get tracked.. Rent paid means someone has to show inward and pay tax on that.. all these are temporary loop holes only.. Avoid these for best long term results.. they can even pull up records for last 7 years now!!

 

[Slayer]

Aren't we supposed to look at this post, take a moment out of our days and laugh at the person?

Why such a serious discussion?

 

[amitamie]

Also, With the new IT system of AIS and Special transactions, pls. be assured that 10 L. limit will drop very soon. Everyspend of notable value will get tracked.. Rent paid means someone has to show inward and pay tax on that.. all these are temporary loop holes only.. Avoid these for best long term results.. they can even pull up records for last 7 years now!!

Also, With the new IT system of AIS and Special transactions, pls. be assured that 10 L. limit will drop very soon. Everyspend of notable value will get tracked.. Rent paid means someone has to show inward and pay tax on that.. all these are temporary loop holes only.. Avoid these for best long term results.. they can even pull up records for last 7 years now!!

I didn't get any notice but yes In last FY I crossed 10 lacs expense with one of my credit card which was present in my Form 26AS and AIS report.

 

[Wealth is my birth right!]

I didn't get any notice but yes In last FY I crossed 10 lacs expense with one of my credit card which was present in my Form 26AS and AIS report.

As long as ur filed ITR for that FY is more than 10l then nothing to think of

 

[agrawalshishir]

We had this discussion regarding the same few weeks back on Friday twitter space by Kashif.

 

[agrawalshishir]

What if someone doing a business & pays vendor a crore/year & from that profit/income is only 5L, how can it be justified?

In such cases , your GST turnover is reflected in ais, tis and 26as.

Exceeding 20Lpa business requires GST registration even professionals.

At 1cr revenue , if 5L is profit it automatically is reported with balance sheet while filing ITR

 

[hks789]

When do the banks report this AIS?
I have a couple of cards (ICICI and Axis) that crossed 10L by December 2022, but I have not seen them in my AIS till date.

 

[Wealth is my birth right!]

When do the banks report this AIS?
I have a couple of cards (ICICI and Axis) that crossed 10L by December 2022, but I have not seen them in my AIS till date.

Post financial year ending

 

[anirban.choudhuryanirban.choudhury is verified member.]

When do the banks report this AIS?
I have a couple of cards (ICICI and Axis) that crossed 10L by December 2022, but I have not seen them in my AIS till date.

Don’t worry about it if your ITR is above 10 lakhs

 

[hks789]

Don’t worry about it if your ITR is above 10 lakhs

No worries✌️. All are genuine spends and ITR is above that but was wondering why they didn't report it yet 😅

 

[hks789]

Post financial year ending

Thanks 👍

 

[agrawalshishir]

When do the banks report this AIS?
I have a couple of cards (ICICI and Axis) that crossed 10L by December 2022, but I have not seen them in my AIS till date.

Year end