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Tax Rules For Credit Card: Nowadays helping friends is a common thing, whether it is booking a flight, shopping online or paying for a hotel, many people give their credit card to their friends. Friends later return the money through UPI or bank transfer. But do you know that doing this can come under the scrutiny of the Income Tax Department?
If you are repeatedly spending from your card and taking money from friends, then these transactions can be seen as income. Especially when the amount is big or the transactions are happening repeatedly, then the Income Tax Department can inquire why this money came and whether it is your income.
Example: Suppose Rahul bought a laptop worth ₹ 75,000 online for his friend Ajay using his credit card. Ajay transferred ₹ 75,000 to Rahul via UPI the next day. Now if this happens once or twice then there is no problem. But if Rahul repeatedly spends from his card for Ajay or other friends and then they receive money via UPI or bank transfer, then the Income Tax Department may feel that Rahul is receiving this money as income.
What do the rules say?
If a credit card expenditure of ₹ 10 lakh or more is made in a financial year , then the bank has to give this information to the Income Tax Department. Paying credit card bills above ₹ 1 lakh in cash is also a cause of suspicion for the department. If you take money in cash from friends or transfer it without any documents, then you may also be charged a penalty. Therefore, it is important that every transaction is done through banking channels like UPI, NEFT or IMPS.
Tax experts say that occasional favor usually does not have any tax implication. But if it becomes a habit or the amount is large, then the income tax department can take it seriously.
How to protect yourself?
- Keep banking records of every transaction
- Avoid cash transactions, do only UPI or bank transfer
- Do not do this repeatedly, otherwise it can be considered a business activity
- If the amount is large, make a written consent or agreement
School Closed: Schools up to 12th standard are closed in this district of UP even today, colleges closed due to floods and rain
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