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Tax Complications on Credit Cards

Dhoni and Virat are Good Friends 

Virat Wanted to Buy an iPhone for ₹1.5 Lakh 

He Asked For Dhoni’s HDFC Credit Card To Get ₹9,000 Instant Discount on Amazon
In this case, 

Dhoni is using his Credit Card to help his friend get some discounts and cashback 

There’s nothing wrong in helping

But there are certain things that one should keep in mind while using a credit card. Let’s understand 👇

Banks and Financial Institutions are mandated to report any high-value transaction above ₹10 lakh through Form 61A

So what are the rules for Credit Cards?

Simply put,

If you pay your credit card bills in cash by visiting the branch for more than ₹1 Lakh

Or use your credit card for more than ₹10 Lakh in a financial year

Are there any upper limits?

Well, There’s no limit on how much you can spend on your credit card in a year

But high-value transactions are likely to be flagged when spend is disproportionately high for the individual’s income or return

Important - This is how Reporting by the Bank appears on your Annual Information Statement (AIS)

You can also check yours by logging into your Income Tax Portal Account
What should we do?

• Even if you are helping, record such transactions on a Google Sheet and ask for the invoice from your friend

• You can get the product shipped to your friend’s name and address and bill it to your name and address

Don’t take payment in your bank account, ask your friend to directly deposit the amount in your credit card itself

There are many third-party apps like Paytm, Mobikwik or even Banks Websites that have direct repayment option 

(Keep the payment screenshot for records) 

This blog is also very important for students and youngsters

When we use credit cards, we earn reward points and cashback 

Doing this once in a while is okay but using your credit cards for high-value transactions frequently can invite unnecessary trouble.

Credit Card is a double edge sword

Use it responsibly


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