Managing High Credit Card Transactions and Income Tax Notices

[Ekavya]

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 .

Shit! I am cooked

 

[Ekavya]

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

Thanks man! for the detailed post

 

[Zacobite]

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.

you won't get any notice of ur spends are in line with your income.. whether u spend 10.L. or more.. but if spends are disproportionate then you will get a query! which you will need ro respond to.. if they don't agree tgen you will get a demand notice later.. also
.PAYMENT made to credit card(s) ( per bank) above 10 L is reported.. doesn't mean you will get a notice

 

[Ekavya]

you won't get any notice of ur spends are in line with your income.. whether u spend 10.L. or more.. but if spends are disproportionate then you will get a query! which you will need ro respond to.. if they don't agree tgen you will get a demand notice later.. also
.PAYMENT made to credit card(s) ( per bank) above 10 L is reported.. doesn't mean you will get a notice

Man! I have no Income. I pay my family's (Joint Family of 11) Electricity, Grocery and Online shopping (Phone, AC, Fridge) from my Credit card. And for the past a few months I have been using UPI to send money to my Merchant friend. (Who gives my Money back before the due date). Today I realised that I have crossed 10L mark (14.25L) in ICICI bank cards (Total Cards). I still haven't gotten any nitice But I am uncertain what will happen next.

​

 

[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.

I don't income. I pay for my family's bills, online shopping. And for the last few months I sent money to my Merchantt friend using CC UPI, which inflated my spendings. I don't know what will happen now.

 

[Anindya98]

View attachment 63713

I don't income. I pay for my family's bills, online shopping. And for the last few months I sent money to my Merchantt friend using CC UPI, which inflated my spendings. I don't know what will happen now.

Even if you pay your family bills your expenses are very high without earnings. So, you will not be able to justify the spending done on your card.
When getting the cards you must have shown some income in the card application.

First, categorize your genuine spends and money sent to your friend's merchant upi.
After that reach out to a CA.
Also, your last 2 years' spending is quite high without any income.

 

[Zacobite]

nothing.. wait.. if you have no income then you won't file any return? Even of you do.. show the gains you made as income which will be below taxable limit.. keep accounts.. get a good CA if you get a question.. now.. nothing to do.. but yes.. going forward.. you may rethink your game play

 

[Ekavya]

Even if you pay your family bills your expenses are very high without earnings. So, you will not be able to justify the spending done on your card.
When getting the cards you must have shown some income in the card application.

First, categorize your genuine spends and money sent to your friend's merchant upi.
After that reach out to a CA.
Also, your last 2 years' spending is quite high without any income.

I bought AC (Me) , Laptop (Distant Relative) on EMIS. Took two Credit card loans (For a family member) (1L+2.5L). One is still pending. But most of my Spend are due to sending money through UPI payments. (50K, 60K at a Time) .I know I am cooked.

 

[SSV]

I bought AC (Me) , Laptop (Distant Relative) on EMIS. Took two Credit card loans (For a family member) (1L+2.5L). One is still pending. But most of my Spend are due to sending money through UPI payments. (50K, 60K at a Time) .I know I am cooked.

But need to find out half cooked or fully cooked.. !!
or just started in getting cooked !!

 

[Zacobite]

I bought AC (Me) , Laptop (Distant Relative) on EMIS. Took two Credit card loans (For a family member) (1L+2.5L). One is still pending. But most of my Spend are due to sending money through UPI payments. (50K, 60K at a Time) .I know I am cooked.

you may just be within 10L..as mentioned the reporting is on PAYMENT not on spend.. emi / loan means your payment will be lesser..

 

[Quiksilver27]

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

check your AIS statement by logging in to the income tax website.. even if u dont file returns if bank has reported you, you shud be able to see it.. the 10 lakhs limit is the reporting limit per bank.. for eg if u have 3 axis cards then only if the total payments made to these 3 cards exceeds 10 lakhs then only Axis bank will report you to the income tax dept.. but if u have spent 5 lakhs in all hdfc cards and 5 lakhs in all axis cards then neither of them will report you. If not reported in AIS then ur safe..

 

[Ekavya]

Even if you pay your family bills your expenses are very high without earnings. So, you will not be able to justify the spending done on your card.
When getting the cards you must have shown some income in the card application.

First, categorize your genuine spends and money sent to your friend's merchant upi.
After that reach out to a CA.
Also, your last 2 years' spending is quite high without any income.

I am in a very bad situation in life and I became furious when I came to know about these Income Tax on CC spends. I made two mistakes in the excel sheet and for those reasons my Numbers were inflated. The correct one is this. It seems more balanced and under 10L per year. But as you mentioned I still can't justify this spends as my I don't have any source of income and I revolve money from one CC Merchant account to savings account.

 

[Ekavya]

you may just be within 10L..as mentioned the reporting is on PAYMENT not on spend.. emi / loan means your payment will be lesser..

Thanks man for the Hope.

 

[Ekavya]

check your AIS statement by logging in to the income tax website.. even if u dont file returns if bank has reported you, you shud be able to see it.. the 10 lakhs limit is the reporting limit per bank.. for eg if u have 3 axis cards then only if the total payments made to these 3 cards exceeds 10 lakhs then only Axis bank will report you to the income tax dept.. but if u have spent 5 lakhs in all hdfc cards and 5 lakhs in all axis cards then neither of them will report you. If not reported in AIS then ur safe..

I would definitely check it. Thanks for this.

 

[pinki]

Bhai aap masoom heavyy driver hain

 

[Ekavya]

Bhai aap masoom heavyy driver hain

Vai! Hindi deep me jyada samaj nahi aati .

 

[Ekavya]

check your AIS statement by logging in to the income tax website.. even if u dont file returns if bank has reported you, you shud be able to see it.. the 10 lakhs limit is the reporting limit per bank.. for eg if u have 3 axis cards then only if the total payments made to these 3 cards exceeds 10 lakhs then only Axis bank will report you to the income tax dept.. but if u have spent 5 lakhs in all hdfc cards and 5 lakhs in all axis cards then neither of them will report you. If not reported in AIS then ur safe..

Man! Do I have to see it in "Annual Statements" -> " Other Informations"? It's empty for all financial years

 

[pinki]

Vai! Hindi deep me jyada samaj nahi aati .

I meant to say that
You are an innocent heavy driver

 

[Ekavya]

I meant to say that
You are an innocent heavy driver

After Paying all CC dues. I am going to leave this Dhanda for a Lifetime.

 

[pinki]

After Paying all CC dues. I am going to leave this Dhanda for a Lifetime.

Lesson learnt hard way
Don't be afraid for notices .

Bhagwan apke sath hain !
Hare Krishna