Managing High Credit Card Transactions and Income Tax Notices

[Ekavya]

I heard that people may receive income tax notices if they spend above a certain amount on their credit cards. I have a few credit cards (UPI-Rupay) that I primarily use for transferring money to a friend (in business) who frequently needs immediate funds. As a result, my credit card transactions are quite high.

What is the limit that I should not exceed for each credit card to avoid receiving a notice from the Income Tax Department? Is this limit calculated on a calendar year basis or a financial year basis? Also, do they consider each credit card separately or the cumulative transaction amount across all cards?

Lastly, what should I do if I receive an income tax notice? I’m feeling quite tense as I have made significant transactions in the past 12 months. Please help.

 

[pinki]

U should not exceed 10L / annum from one bank

 

[SunnyM]

U should not exceed 10L / annum from one bank

People who didn't use that much even received notices. A guy rotated money through one of these apps for some cashback. It was 4 lakhs in a month only and he too received a notice. People who don't file itr or file nill itr are at maximum risk imo if they are involved in these chindi chori.

 

[praful47]

People who didn't use that much even received notices. A guy rotated money through one of these apps for some cashback. It was 4 lakhs in a month only and he too received a notice. People who don't file itr or file nill itr are at maximum risk imo if they are involved in these chindi chori.

Conclusion of ITD - agar tum jyada kama rahe ho to muje bhi thoda hissa chahiye ...... nahi to pura paisa mera

 

[Fini7777]

I heard that people may receive income tax notices if they spend above a certain amount on their credit cards. I have a few credit cards (UPI-Rupay) that I primarily use for transferring money to a friend (in business) who frequently needs immediate funds. As a result, my credit card transactions are quite high.

What is the limit that I should not exceed for each credit card to avoid receiving a notice from the Income Tax Department? Is this limit calculated on a calendar year basis or a financial year basis? Also, do they consider each credit card separately or the cumulative transaction amount across all cards?

Lastly, what should I do if I receive an income tax notice? I’m feeling quite tense as I have made significant transactions in the past 12 months. Please help.

It depends on your ITR
if u don't file ITR u may be at risk

In general, The total spends on all ur cards < your total annual Income and total cc bills paid in a yr <10L
If u have income > ur spends u don't need to worry otherwise u've to face the consequences

My suggestion: split ur spends around multiple cards in your portfolio so that u will not pay cc bill of overall 10L or more on a single cc
and split your transactions to multiple bank accounts

This will decrease the chance of IT notice and u will not come into your bank's notice
Anyways, Be careful as your PAN data is the same for all cards and accounts

 

[Ekavya]

U should not exceed 10L / annum from one bank

Per Calender year or Financial year?

 

[Ekavya]

People who didn't use that much even received notices. A guy rotated money through one of these apps for some cashback. It was 4 lakhs in a month only and he too received a notice. People who don't file itr or file nill itr are at maximum risk imo if they are involved in these chindi chori.

Man! Is it serious offence? What that guy did to get out of that situation?

 

[Ekavya]

It depends on your ITR
if u don't file ITR u may be at risk

In general, The total spends on all ur cards < your total annual Income and total cc bills paid in a yr <10L
If u have income > ur spends u don't need to worry otherwise u've to face the consequences

My suggestion: split ur spends around multiple cards in your portfolio so that u will not pay cc bill of overall 10L or more on a single cc
and split your transactions to multiple bank accounts

This will decrease the chance of IT notice and u will not come into your bank's notice
Anyways, Be careful as your PAN data is the same for all cards and accounts

" Total spends on all ur cards" of Same banks? or all cards for different banks?

 

[pinki]

Per Calender year or Financial year?

Per Fin year

 

[Fini7777]

" Total spends on all ur cards" of Same banks? or all cards for different banks?

simple, all your cards from different banks in a FY
and the total spent on a single card should not exceed 10L in a FY

 

[pinki]

" Total spends on all ur cards" of Same banks? or all cards for different banks?

Kisi ek bank ke ek card pe 10 L se jyada mt kro .

 

[reach2dpg]

I heard that people may receive income tax notices if they spend above a certain amount on their credit cards. I have a few credit cards (UPI-Rupay) that I primarily use for transferring money to a friend (in business) who frequently needs immediate funds. As a result, my credit card transactions are quite high.

What is the limit that I should not exceed for each credit card to avoid receiving a notice from the Income Tax Department? Is this limit calculated on a calendar year basis or a financial year basis? Also, do they consider each credit card separately or the cumulative transaction amount across all cards?

Lastly, what should I do if I receive an income tax notice? I’m feeling quite tense as I have made significant transactions in the past 12 months. Please help.

Golden rule: Getting a IT notice is not the end of the world. Your spends should match your income, so that it can be justified.

Are you paying your friend using Rupay Credit Card? Assuming that you are sending significant amount (>2000) each time, your friend has to pay MDR per transaction from you. Better use NEFT/IMPS and get the 2% for yourself .

 

[Ekavya]

Golden rule: Getting a IT notice is not the end of the world. Your spends should match your income, so that it can be justified.

Are you paying your friend using Rupay Credit Card? Assuming that you are sending significant amount (>2000) each time, your friend has to pay MDR per transaction from you. Better use NEFT/IMPS and get the 2% for yourself .

Yeah! Man! He has to give 2.36% of the amount as MDR. I am just thinking how can I justify this that I don't have that income but I send my friend money from CC-UPI and then after a few days he gives my money back.

 

[SunnyM]

Man! Is it serious offence? What that guy did to get out of that situation?

Paid the penalty and tax . Otherwise they can freeze all your accounts and take further legal action. CAs might be able to provide further clarity.

 

[Anindya98]

Yeah! Man! He has to give 2.36% of the amount as MDR. I am just thinking how can I justify this that I don't have that income but I send my friend money from CC-UPI and then after a few days he gives my money back.

Don't panic first calculate the total amount you utilized last financial year and your current income. If it is close then it is okay. If you get a notice get in touch with a CA or you think you have crossed a very large amount of transaction that you are not able to justify reach out to a CA. They will help you sort it out.

 

[Ekavya]

Kisi ek bank ke ek card pe 10 L se jyada mt kro .

Man! Please clearify. In a financial year , I spend 5L on card A and 6L on Card B of the Same bank. Not a single card crossed 10L. But the bankwise spent crossed 11L. Am I safe? @pinki,

 

[Ekavya]

Don't panic first calculate the total amount you utilized last financial year and your current income. If it is close then it is okay. If you get a notice get in touch with a CA or you think you have crossed a very large amount of transaction that you are not able to justify reach out to a CA. They will help you sort it out.

Ok man!
I hope I don't have to do it

 

[SSV]

I heard that people may receive income tax notices if they spend above a certain amount on their credit cards. I have a few credit cards (UPI-Rupay) that I primarily use for transferring money to a friend (in business) who frequently needs immediate funds. As a result, my credit card transactions are quite high.

What is the limit that I should not exceed for each credit card to avoid receiving a notice from the Income Tax Department? Is this limit calculated on a calendar year basis or a financial year basis? Also, do they consider each credit card separately or the cumulative transaction amount across all cards?

Lastly, what should I do if I receive an income tax notice? I’m feeling quite tense as I have made significant transactions in the past 12 months. Please help.

Basically , it is 10L payments into Credit card duirng a financial year that matters in this case. If it exceeds 10L then it will be reported in AIS.
Then depending upon your itr you may or may not get IT notice..
If your ITR justifies you won't get IT notice.
If you didn't file ITR, then you need to explain the purposes of these transactions and source money and then file an ITR If required. At this time you may need help of a CA.
Don't get worried and at the same time don't do these kind of things..it unnecessarily complicates things and involvement of a CA may be required..

Here is the detailed post I posted for similar query in another thread.
It has all details required..
Mark my post as solution If you feel it answered your query..

Enjoy but be careful ..

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The definition is:
If your Total Payments into all of the Credit cards held in a Bank crosses more than 10L during a financial year ( 01 April to 31 March) then this will be reported in AIS...

Spends and payments are two different terms.

Spends - the transactions that were settled and billed..
Payments: the bill payments made into a credit card account after the bill is generated (typically) or before the bill is generated if you have habit of paying before bill generation...

Hope you understood the difference here..


Example:
1) You have two cards in ..
1. NEO
2. My ZOne:

On NEO - you spent 5 lakhs during FY 23-24 , but paid only 4.5L unitl 31 /03 ( deferring 50K to be paid in April 2024).
On My ZOne: you speent 5.5 lakhs , but paid 5.4 L .. ( deferring 10K to be paid in April 2024)..

Here
Total spends on both the cards: 10.5L ( 5+5.5L)
Total payments made into these two cards: 9.9L ( 4.5L + 5.4L)

In this case nothing will be reported by to ITD for AIS purposes, even though your total spends are more than 10L i.e 10.5 L , as your total payments are still under 10L ie. 9.9L..

Enjoy..

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Post in thread 'What get reported to AIS? Spends or Payments?' https://www.technofino.in/community...d-to-ais-spends-or-payments.29222/post-720195

 

[Lorddiesel]

I heard that people may receive income tax notices if they spend above a certain amount on their credit cards. I have a few credit cards (UPI-Rupay) that I primarily use for transferring money to a friend (in business) who frequently needs immediate funds. As a result, my credit card transactions are quite high.

What is the limit that I should not exceed for each credit card to avoid receiving a notice from the Income Tax Department? Is this limit calculated on a calendar year basis or a financial year basis? Also, do they consider each credit card separately or the cumulative transaction amount across all cards?

Lastly, what should I do if I receive an income tax notice? I’m feeling quite tense as I have made significant transactions in the past 12 months. Please help.

Financial year basis.
There is no such limit. They match with your ITR.

Ex: If your ITR is 1cr a year and you spend 1 cr yearly on your credit cards, nothing happens.

Ex 2 : You file 2-3 lakh ITR or even No ITR and spends on your cr cards say even 5 L, you will receive ITR notice 100%

If u receive notice you need to hire a CA to sort it out ( CA will charge his fee + penalties by IT Dept need to be paid for income expenditure mismatch )

 

[pinki]

Man! Please clearify. In a financial year , I spend 5L on card A and 6L on Card B of the Same bank. Not a single card crossed 10L. But the bankwise spent crossed 11L. Am I safe? @pinki,

No no, for one bank u should not cross 10 L irrespective of 2 or 3 cards from that same bank.

Since both cards A n B are from same bank then combining both, u shouldn't cross 10 L .