Income Tax Notice on credit card usage!!

[Sachs]

I have heard that if you spend more than 10 L on a credit card in a year, the CC company is required to report it to income tax department.
I have a alot of cards whose maximum benefit I have calculated after watching technofino videos. I have also used yaper recently & I have realized that they have created a safe system (albeit a very hassle filled one for credit card users.)
I was wondering what will happen if I spend 9.5L on all of my 11 cards. Will I be served a notice because I have spent 104L on my cards.
OR
Will I be not served any notice as my spending on any card has not crossed 10 L??

 

[Mohur]

You only need to worry if spends are more than earning

 

[Sachs]

You only need to worry if spends are more than earning

So I wont be able to maximise my rewards on all my cards to their COMPLETE POTENTIAL?

 

[rp0703]

I have heard that if you spend more than 10 L on a credit card in a year, the CC company is required to report it to income tax department.
I have a alot of cards whose maximum benefit I have calculated after watching technofino videos. I have also used yaper recently & I have realized that they have created a safe system (albeit a very hassle filled one for credit card users.)
I was wondering what will happen if I spend 9.5L on all of my 11 cards. Will I be served a notice because I have spent 104L on my cards.
OR
Will I be not served any notice as my spending on any card has not crossed 10 L??

If you make CC bill payments of Rs. 10 Lakhs or above in a year via any mode (UPI, NEFT, IMPS etc.) credit card company is required to report it to the IT department. Rs. 10 Lakhs is a cumulative figure applicable to all cards a person is holding.

It's up to the IT department to serve notice or notice. You might or might not get served notice.

Just make sure your income is matching your expenses so that you can justify the spending. Also, if you are making purchases for relatives or friends, then make sure to receive all the money via banking channel so that there is a proper transaction trail. If, possible, open a separate bank account for these type of transactions.

 

[Naresh kolla]

If you make CC bill payments of Rs. 10 Lakhs or above in a year via any mode (UPI, NEFT, IMPS etc.) credit card company is required to report it to the IT department. Rs. 10 Lakhs is a cumulative figure applicable to all cards a person is holding.

It's up to the IT department to serve notice or notice. You might or might not get served notice.

Just make sure your income is matching your expenses so that you can justify the spending. Also, if you are making purchases for relatives or friends, then make sure to receive all the money via banking channel so that there is a proper transaction trail. If, possible, open a separate bank account for these type of transactions.

hi, my annual income was,as per pan records 6lakhs.but my spends via all my credit cards in last 6months was almost 80lakhs.what will happen next? is IT department will send notice to me?

 

[rp0703]

hi, my annual income was,as per pan records 6lakhs.but my spends via all my credit cards in last 6months was almost 80lakhs.

How did you spend so much? Do you have a business or are you a salaried person ?

what will happen next? is IT department will send notice to me?

Probably.

 

[Tosh]

You better start looking for a top tier CA who can probably justify your spends and somehow match income and expenses.

Don't want to sound negative but why would you do so much spends when your income is not even 10% of it. Were the rewards really worth it?

As far as the IT notice goes it can take upto 7 years for them to send you one. When it does you better have explanation ready for your numbers else tax can penalty can go as high as 60% of expenses and in your case that would be in the ballpark of half a crore.

 

[Sachs]

Thug life

 

[Wealth is my birth right!]

hi, my annual income was,as per pan records 6lakhs.but my spends via all my credit cards in last 6months was almost 80lakhs.what will happen next? is IT department will send notice to me?

Bhai u've beaten the bush hard corely, we cannot fix it now.
Never exceed ur spends for that FY whatever your ITR amount being filed.
Ex my ITR 15L i used to fix all cc spends till 12L being thinking that 3L is my savings so no IT queries will come.....peace of mind is worthy than cc rewards buddy.
IT dept empowered to send notice even after some years whenever they find time to catch this patterns.

 

[Vipsssy]

Guys request you to please not try to beat the system in non ethical manners

Remember a computer is much more smarter than all of us and they will very easily find patterns in your spends and income and raise alarms

 

[Vipsssy]

Always remember Income Tax can go back as far as 8 years to dig up a case against you.

So don't think if this year I am safe as I did not receive any notice, wait for few more years and you might get it

and once you enter in this vicious circle of IT, not easy to get out

all your other non credit card tx will also be evaluated matlab pura kundali nikalenge tumhari

 

[Gkcards]

I have heard that if you spend more than 10 L on a credit card in a year, the CC company is required to report it to income tax department.
I have a alot of cards whose maximum benefit I have calculated after watching technofino videos. I have also used yaper recently & I have realized that they have created a safe system (albeit a very hassle filled one for credit card users.)
I was wondering what will happen if I spend 9.5L on all of my 11 cards. Will I be served a notice because I have spent 104L on my cards.
OR
Will I be not served any notice as my spending on any card has not crossed 10 L??

it's per card. if it crosses 10L per card, then it will show in 26AS I think. if ur income is enough to justify the spend, nothing to worry

 

[Tosh]

Its not per card afaik it's per pan that is cumulative of all cards registered with a pan.

 

[BMR]

it's per card. if it crosses 10L per card, then it will show in 26AS I think. if ur income is enough to justify the spend, nothing to worry

It shows under the AIS available on the income tax portal.

Also take into consideration the investments you do. The investments + spends have to Match the income.

 

[Sachs]

Lot of confusion here....

 

[CardShard]

You will see a notice in 3 to 5 years time.

Edit: IT dept sent notice to a salaried guy with income ~50L who had paid all taxes but just didn't file the return. Bear in mind, the guy would have got back a couple thousand rupees from ITD if he had filed a return. With some digitalization happening, it costs ITD very little to send out a notice. So these instances are only going to go up. Things have already changed a lot, and on top of that, today's crimes will be processed 5 years from now, when there's even better tech (and by then the process might have become more automated).

 

[Gautham]

hi, my annual income was,as per pan records 6lakhs.but my spends via all my credit cards in last 6months was almost 80lakhs.what will happen next? is IT department will send notice to me?

I wonder whether he mistyped 8 lakhs as 80 lakhs!

 

[aditya001]

I have heard that if you spend more than 10 L on a credit card in a year, the CC company is required to report it to income tax department.
I have a alot of cards whose maximum benefit I have calculated after watching technofino videos. I have also used yaper recently & I have realized that they have created a safe system (albeit a very hassle filled one for credit card users.)
I was wondering what will happen if I spend 9.5L on all of my 11 cards. Will I be served a notice because I have spent 104L on my cards.
OR
Will I be not served any notice as my spending on any card has not crossed 10 L??

I guess its not about income vs expense, its about keeping your transactions legit.. For example its legal to use your credit card for business purpose, its only banks t&c because they dont want to give rewards. So, for example if i use card's credit line as cash flow to run my business & spend suppose 10 lakh rs in a month from credit card and earn 11 lakh rs in total.. so in this case my profit is (1 lakh) so even if my transaction is of 120 lakh per year and i earn 12 lakh profit for that credit line, and all the transactions we done properly through banking channels its still ok to spend a lot and have less ITR right?

 

[CardShard]

I guess its not about income vs expense, its about keeping your transactions legit.. For example its legal to use your credit card for business purpose, its only banks t&c because they dont want to give rewards. So, for example if i use card's credit line as cash flow to run my business & spend suppose 10 lakh rs in a month from credit card and earn 11 lakh rs in total.. so in this case my profit is (1 lakh) so even if my transaction is of 120 lakh per year and i earn 12 lakh profit for that credit line, and all the transactions we done properly through banking channels its still ok to spend a lot and have less ITR right?

You are wrong in most cases. You, the person, are a different entity from the business you are running. The card belongs to you. Spends on your card are your spends. You are supposed to repay the card from your income. Any swipes on the pos machine of your business will be counted as revenue for your business.

This will cause huge issues later on for both you, and your business. (Since you are spending 120L a year with insufficient income, and your business is generating 120L revenue without paying tax, and reporting the 120L as revenue).

Technically, the conclusion that ITD might reach is, your business generated 120L revenue, but also paid 120L as "salary" to you. Hence the business is at net zero. But you might end up paying 30% of 120L as income tax on salary.

Edit: Of course there are holes in this system, and blind spots exist where ITD doesn't have visibility. But these systems are getting better every year. To reiterate, it's not whether ITD can figure it out by the end of this FY/AY. It's whether they can figure out in the next 5 to 10 years. Now it's upto you to figure out the risk reward equation of this game of hide and seek.

 

[aditya001]

You are wrong in most cases. You, the person, are a different entity from the business you are running. The card belongs to you. Spends on your card are your spends. You are supposed to repay the card from your income. Any swipes on the pos machine of your business will be counted as revenue for your business.

This will cause huge issues later on for both you, and your business. (Since you are spending 120L a year with insufficient income, and your business is generating 120L revenue without paying tax, and reporting the 120L as revenue).

Technically, the conclusion that ITD might reach is, your business generated 120L revenue, but also paid 120L as "salary" to you. Hence the business is at net zero. But you might end up paying 30% of 120L as income tax on salary.

As far as i know that if you are the director of company you can spend your own money for company and company can reverse it.. it can be treated as loan to the company.. not sure here though if someone here is CA please correct..