Income tax rule on credit card transaction: Credit cards are used by everyone. It is becoming very popular especially among the youth. Whether you have money in your pocket or not, it doesn’t matter if you are carrying a credit card.
Many times people while making purchases from it are unable to keep in mind that how much has been spent and how much should be done. The Income Tax Department also keeps an eye on your credit card expenses.
If you look at the figures of the Reserve Bank, in November 2022, the number of credit card purchases on the e-commerce website has increased by 3.7 times i.e. almost four times. Not only this, even at Point of Sale (PoS), credit card purchases have increased 1.2 times as compared to debit cards. Obviously, consumers find it very easy to buy from this, but many times they spend more than necessary and come in the eyes of the Income Tax Department.
What is the rule of credit card purchases / Income tax rule on credit card transaction
Although the Income Tax Department does not have any specific rule regarding credit card purchases, but banks and financial institutions have been asked to report high value transactions to the Income Tax Department. Under Income Tax rules, banks have to report transactions of more than 10 lakh through Form 61A. Not only this, the information about the credit card expenses of a person will also have to be given to the banks through Form 26A. If a credit card holder has done a high value transaction, then its information has to be given.
When will the notice of income tax come, the Income Tax
Department has also told that how much money an individual customer will spend, then he can come in the eyes of income tax. According to the Income Tax Department, every customer who deposits a credit card bill of more than Rs 1 lakh every month may face scrutiny. Especially if a customer submits the bill in cash, then the Income Tax Department may have a crooked eye on him and a notice may also come.
Banks give information every year
Income Tax Department has made it mandatory for banks, companies, registrars and post offices to report credit card transactions every year through Form 61A. It contains the complete statement of financial transactions. Not only this, taxpayers will also have to give information about their transactions in Form 26AS. Credit card transactions will also have to be included in this.