Understanding the implications of high credit card usage on your income tax filings is crucial. This post shares real-time insights into how credit card transactions are reported to the Income Tax Department via the Annual Information Statement (AIS) portal, particularly when spending exceeds the ₹10 Lakh threshold.
Key takeaways regarding credit card usage and Income Tax rules:
- AIS Reporting Limit: Credit card usage exceeding ₹10 Lakh per financial year is reported on the AIS portal. Ensure your declared annual income aligns with reported credit card expenditure to avoid queries from the IT Department.
- Genuine Spends vs. Card Rotation: While genuine high spends are permissible if supported by income, beware of credit card balance rotation schemes, especially when crossing the ₹10 Lakh limit, as this can attract scrutiny.
- Aggregate Limit for Same Bank Cards: If you hold multiple credit cards from the same bank, their combined annual usage is aggregated towards the ₹10 Lakh reporting limit.
- Non-Reported Spends: Individual credit cards with annual spends below ₹10 Lakh might not be reported on the AIS portal by default, though this can vary.
This information is shared to help users understand potential tax implications of their credit card usage. It is advisable to maintain transparency and ensure your financial records are in order.