Скачать или смотреть Income Tax Notice on Credit Card Usage!!Detailed Explanation💯💯

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🚨 Why Did You Receive an Income Tax Notice for Credit Card Use?
🧾 1. High Credit Card Payments Reported by Banks
As per Rule 114E of the Income Tax Rules, banks must report high-value transactions to the IT Department under SFT Specified Financial Transactions

📌 Reporting Thresholds:
Type of Payment Threshold Reported By
Credit card cash payments ₹1 lakh or more in a financial year Bank
Credit card total bill payments (any mode) ₹10 lakh or more in a financial year Bank

If your payments cross these limits, your PAN is flagged, and the data appears in:

Form 26AS

Annual Information Statement AIS

If your declared income in your ITR doesn't justify this level of spending, the system might auto-generate a compliance notice.

🧠 2. Spending vs Income Mismatch
For example:

You paid ₹12 lakh in credit card bills last year.

But your ITR shows only ₹6 lakh of annual income.

🚩 This raises red flags and the tax department may send a notice asking:

“What is the source of funds for these transactions?”

📬 Common Types of Notices You Might Receive:
Notice Section Purpose
Preliminary Inquiry (Non-statutory) Sent via e-compliance portal asking for clarification
Section 133(6) Request for information from the taxpayer
Section 148 Reopening of assessment due to income escaping assessment
Section 142(1) Inquiry before assessment – request for documents
Section 143(2) Scrutiny notice to verify claims made in the ITR

✅ What You Should Do
🔍 1. Check the Notice Carefully
Log in to the Income Tax e-filing portal

Go to: e-Proceedings View Notices/Letters

Read the reason for the notice.

🗂 2. Gather Evidence
Prepare to explain your credit card payments with documents such as:

Bank statements

Source of funds salary, rental income, business income, gifts, loans, etc

Credit card statements

ITR copies

📝 3. File a Response Promptly
If it’s a compliance notice, respond online via the compliance portal.

Be honest. If you missed declaring income, it’s better to revise your return before the deadline.

You may also be able to file an Updated ITR u/s 139 8A to correct any mistakes.

🧑‍💼 4. Consult a CA or Tax Expert
If the amount involved is high or you're unsure how to explain your position, it’s advisable to consult a chartered accountant.

🧾 Example Response Scenario
Notice: Your credit card payment of ₹11,80,000 is higher than your declared income of ₹5,00,000.

Response:

₹6,00,000 came from a loan loan sanction letter attached

₹2,00,000 paid from savings

₹3,80,000 was from parental gift gift deed attached)

All payments made from personal savings account bank statement attached

🔐 Important Tips
Credit card payments are not taxed, but source of funds must be explainable.

Always reconcile your credit card usage with your declared income.

Regularly review your AIS and Form 26AS.