MANAGING MULTIPLE CREDIT CARDS IN VIEW OF ITR

[drabhishek90]

My CA says that having multiple CC makes it difficult to process ITR since he enters all the transactions in Tally and then it becomes difficult to know which spend was a DRAWING which was a BUSINESS EXPENDITURE. (Note: I know many people will say that Business Expenses are not meant to be on CC but I think some level of expenses are allowed like Flights and Petrol. Otherwise how do Amex Centurion or Platinum Charge card is said to be for people who travel extensively for business.)

Anyways, wanted to know how people of this community who hold multiple CC manage their ITR if they are self employed. How do they keep track of their drawing vs business expenses.

 

[Anupama_Jha]

The answer to this question is not straightforward. But, for simplicity......

Your income after taxation shouldn't exceed the total spendings on all ur credit cards.

As long as you maintain this, you are safe.

Even if occasionally, it shouldn't exceed more than 5L of your total income.

Rest, if you do shopping for others, or business spends, or manufactured spends for RPs or cashback which exceeds your total income in FY, you are never safe.......

 

[sunit123]

Some CA's (not all) unnecessary complicate things and create fear in mind of tax payer.

1. In Book of accounts it is not necessary to mention whether payment is made through CC or Bank account. It is only a ledger entry
2. Keep spend on all CC below 10 Lacs
3. If you are paying 100% taxes nothing to worry

 

[rajcasio]

OFFTOPIC
I never filed ITR.
Having 10+ cards and use it for few lakhs a year.
What is the max limit(usage) not to get ITR notice?
How to calculate the TOTAL amount spent for the fiscal year? Manually?

 

[Lobogris]

OFFTOPIC
I never filed ITR.
Having 10+ cards and use it for few lakhs a year.
What is the max limit(usage) not to get ITR notice?
How to calculate the TOTAL amount spent for the fiscal year? Manually?

There is no limit and no notice is issued as long as you are filing an ITR that matches the spends. You can spend 100 crores per year if you are earning 200 crores.

 

[Lobogris]

Some CA's (not all) unnecessary complicate things and create fear in mind of tax payer.

1. In Book of accounts it is not necessary to mention whether payment is made through CC or Bank account. It is only a ledger entry
2. Keep spend on all CC below 10 Lacs
3. If you are paying 100% taxes nothing to worry

Most CA needlessly scare clients, What’s the issue with this 10 lacs spending on a card? An AIS entry doesn’t mean anything and doesn’t create any problems. I spend over 10 lakhs on several cards each year. Every year, I have dozens of AIS entries for sale and purchase of properties, stocks, FDs and credit cards. No one has ever questioned it.

 

[drabhishek90]

OFFTOPIC
I never filed ITR.
Having 10+ cards and use it for few lakhs a year.
What is the max limit(usage) not to get ITR notice?
How to calculate the TOTAL amount spent for the fiscal year? Manually?

If you spend more than 10 lacs a year on any bank credit card (Suppose you have 2 HDFC CC - then the total spend on those 2 CC should be less than 10 lacs), then you are safe. Otherwise spends more than 10 lacs will be sent by bank to the IT Dept due to regulations.

 

[drabhishek90]

There is no limit and no notice is issued as long as you are filing an ITR that matches the spends. You can spend 100 crores per year if you are earning 200 crores.

Again I have a doubt regarding that. Suppose you are earning 200 crores and you spend 100 crores. Obviously most of those spends would be business in nature and not personal. So can you do some of those business expenses by CC if you maintanin your books correctly...?

 

[sunit123]

Again I have a doubt regarding that. Suppose you are earning 200 crores and you spend 100 crores. Obviously most of those spends would be business in nature and not personal. So can you do some of those business expenses by CC if you maintanin your books correctly...?

You can but big business spend on CC may lead to cancellation of the card by bank....have as many cards as you and divide your spend...technically banks prohibit use of cc for business spend except cards specifically meant for business purpose

 

[drabhishek90]

You can but big business spend on CC may lead to cancellation of the card by bank....have as many cards as you and divide your spend...technically banks prohibit use of cc for business spend except cards specifically meant for business purpose

I totally agree with you based on what I have read. I have 2 questions:
1) I read a thread where a Biz black card was blocked for electricity payement for commercial use. Isn’t biz black a commercial business card?
2) people using Amex centurion and platinum charge mostly use it for their business travel expenses. How is it justified then???

 

[sunit123]

I totally agree with you based on what I have read. I have 2 questions:
1) I read a thread where a Biz black card was blocked for electricity payement for commercial use. Isn’t biz black a commercial business card?
2) people using Amex centurion and platinum charge mostly use it for their business travel expenses. How is it justified then???

1. Information on this forum is not 100% correct...people pay bill of others through their card..only serial abusers credit cards are blocked by banks

2. It is not feasible for bank to find whether i am traveling for business purpose or personal trip

 

[Ayush_]

If you are not salaried, rather self employed (as it seems in your case), then you only need to keep invoices and details of expenses related to your business through CC, rest of spent will be considered as drawings (personal expenses) and will be reduced from capital.. No need to keep track (unless you want to claim the expenses to reduce income tax liability).

 

[Lobogris]

Again I have a doubt regarding that. Suppose you are earning 200 crores and you spend 100 crores. Obviously most of those spends would be business in nature and not personal. So can you do some of those business expenses by CC if you maintanin your books correctly...?

That was an example I gave. It doesn't have to be a business. Someone like, say Shahrukh Khan or Virat Kohli could spend 100 crores a year on a credit card and since their ITR is way higher, no one will question it. Substitute the names with any other well off person. The expenses can he personal and obviously the combination can be lower like spend 20 lakhs while you earn 50 and so on.

 

[vaibhav111vaibhav111 is verified member.]

My CA says that having multiple CC makes it difficult to process ITR since he enters all the transactions in Tally and then it becomes difficult to know which spend was a DRAWING which was a BUSINESS EXPENDITURE. (Note: I know many people will say that Business Expenses are not meant to be on CC but I think some level of expenses are allowed like Flights and Petrol. Otherwise how do Amex Centurion or Platinum Charge card is said to be for people who travel extensively for business.)

Anyways, wanted to know how people of this community who hold multiple CC manage their ITR if they are self employed. How do they keep track of their drawing vs business expenses.

It quite easy bro actually every day on an excel just type the narration and the card used whether it dr or cr. Simple been doing this for years now. Holding 29 active cc. And then another excel for all cc month wise to track milestone and other thing also help if you lend your cc to friend or family to track who spend was on that card.
My CA don’t even care that I don’t so much work just take last month which is march entry of all cc cause they are liability if bill are pending and carry forward to April 2025 and that it.

 

[drabhishek90]

If you are not salaried, rather self employed (as it seems in your case), then you only need to keep invoices and details of expenses related to your business through CC, rest of spent will be considered as drawings (personal expenses) and will be reduced from capital.. No need to keep track (unless you want to claim the expenses to reduce income tax liability).

Obviously a business wishes to keep most of his drawings as his business expenses. That is where the main benefit of being a businessman rather than a salaried person lies.....

 

[drabhishek90]

It quite easy bro actually every day on an excel just type the narration and the card used whether it dr or cr. Simple been doing this for years now. Holding 29 active cc. And then another excel for all cc month wise to track milestone and other thing also help if you lend your cc to friend or family to track who spend was on that card.
My CA don’t even care that I don’t so much work just take last month which is march entry of all cc cause they are liability if bill are pending and carry forward to April 2025 and that it.

bro looks like either too much work or something that I am unable to understand. I'm going to DM you. Kindly reply there.