How Credit Card Oriented Transactions Affect Taxation in India?

Role of Credit Card Transactions in Tax Calculations?

Often credit card users overlook the fact that credit card transactions are liable to tax scrutiny. As a result, the Income Tax (IT) department is authorized to ask questions about the source and purpose of such funds. Credit card users may face IT notice for failing to provide a legitimate justification for such queries.???

Credit card users must be aware of these consequences before swiping high-purchase value credit cards to make a purchase, shared below -??

• Cash payment made against credit card due amounting to more than 1,00,000 INR might alert IT to verify the income source??
• Cumulative payment for credit cards exceeding 10 lakhs INR in a specific financial year leads to the IT department’s scrutiny
• Use of high valued credit card showing discrepancy within spending and declared income attracted IT in 2024. Consequently, Income Tax Department shot IT notice seeking explanation on the fund sources
• The IT department can issue Form 26AS on high-value credit transactions to cross-check reported income?

5 Smart Tips to Avoid IT Notice While Using High Value Credit Card??

• Try not to reach the topmost credit limit, even if the credit card allows to spend more to avoid tax notice?
• File the taxes on time to avoid unnecessary IT notice.?
• If you are unable to file your taxes, connect with a professional tax consultation firm to file Form 61A and Form 26AS
• Maintain transparency and accuracy to file Form 26AS, as the IT revenue is linked with this form?
• Consider declaring the high valued transactions while filing IT Returns

Conclusion?

Facing IT notice for reckless use of high-purchase-valued credit cards can be a nightmare for respective card users. That’s why credit card users must maintain the utility of the credit facility of their card without drawing the unnecessary attention of the Income Tax Department.?

It’s the only way to avoid IT notices for swiping credit cards recklessly.