🚨 7 Ways to Get a 'Hi There' from the Tax Department 🚨

[TaxWiser]

Wondering how the tax department decides to send you a notice? Here’s a breakdown of the key transactions, especially focusing on cash and online dealings. Better safe than sorry, right?

Let’s go:

Big Fat Purchases (Cash or Online): If you spend ₹10 lakh or more to buy a car—whether in cash or by swiping your card—expect the tax department to take notice. They’ll want to know if your declared income matches your spending habits!

Lavish Vacations (International Spends): Spending ₹2 lakh or more on foreign trips using cash or your credit/debit card can raise eyebrows. They might be curious if your income statements justify your jet-setting lifestyle.

Home Sweet Home: If you invest ₹30 lakh or above in property, whether you pay in cash or transfer funds online, make sure the sources of your money are well-documented. Property transactions, especially when there’s cash involved, are under sharp scrutiny.

Bank Drama (Cash Matters): Depositing ₹10 lakh or more in your savings account is a big red flag. Cash deposits in particular are carefully monitored, so keep all the records handy to prove your sources of income.

Credit Card Mania (Online Spends): Spending ₹1 lakh or more in a single transaction, or ₹10 lakh+ annually on your credit card, makes the department sit up. They’ll investigate to see if your spending aligns with your declared income. This applies even if you’re splurging on online shopping sprees!

Business Buzz (Current Account Cash Flow): For businesses, depositing ₹50 lakh or more into your current account—especially cash deposits—can set off alarms. Always ensure your books are transparent and updated.

Stock Market Whiz: Making significant transactions, whether buying or selling shares or mutual funds online, can also attract notices. The tax department monitors high-value investments and will check if your gains are correctly reported.


Pro Tips:

• Always declare your income honestly and file your returns on time.
• Keep records of all big transactions, whether cash, bank transfers, or card payments.
• If you're spending beyond your declared income (like sudden big-ticket cash deposits), have a valid explanation ready to avoid penalties.

Remember, the tax department isn’t judging your lifestyle—it just wants to ensure your finances are transparent!

(Source: TaxConcept, Summarized Using Samsung Note Assist)

 

[Azadirata]

Is it okay to deposit 10 lakh as cash in a cash credit current account

 

[TaxWiser]

Is it okay to deposit 10 lakh as cash in a cash credit current account

It is allowed, but expect scrutiny and ensure you have proper documentation for the source of funds.

 

[Azadirata]

What if the cash is deposited in an intervel of 3,4 days and at lower amount like 1lakh or something. Will it be scrutinized then

 

[TaxWiser]

What if the cash is deposited in an intervel of 3,4 days and at lower amount like 1lakh or something. Will it be scrutinized then

Depositing cash in smaller amounts (like ₹1 lakh every 3–4 days) into a current or cash credit account does not automatically avoid scrutiny if the total deposits in the financial year cross ₹50 lakh. Banks are required to report aggregate cash deposits exceeding ₹50 lakh in current accounts to the Income Tax department, regardless of the frequency or denomination of individual deposits.

If your total cash deposits remain below ₹50 lakh in the financial year, routine scrutiny is less likely, but banks may still monitor frequent large cash deposits and could ask for the source of funds if they find the pattern unusual or suspicious. Always keep documentation to explain the source of funds if questioned.

 

[Azadirata]

Okay. So 50 lakh criteria is for cash deposit. What about the bank to bank transaction.

 

[AKtheBOSS]

What about the refund in credit card ?
If I spend 5-6 lakhs in 8 transactions from credit card later on money got refunded in same bill, I didn't pay a penny over that spend.
Still it gets counted in 10 lakh spent mentioned in point 5 ?

 

[TaxWiser]

Okay. So 50 lakh criteria is for cash deposit. What about the bank to bank transaction.

Bank-to-bank (non-cash) transactions do not have this threshold but may be scrutinized if deemed suspicious

 

[TaxWiser]

What about the refund in credit card ?
If I spend 5-6 lakhs in 8 transactions from credit card later on money got refunded in same bill, I didn't pay a penny over that spend.
Still it gets counted in 10 lakh spent mentioned in point 5 ?

Refunded credit card transactions (where you pay nothing in the end) are not counted towards the ₹10 lakh annual spend limit for tax department reporting, as long as your net payment remains below the threshold. Always maintain clear documentation of all spends and refunds for the records.

 

[AKtheBOSS]

Refunded credit card transactions (where you pay nothing in the end) are not counted towards the ₹10 lakh annual spend limit for tax department reporting, as long as your net payment remains below the threshold. Always maintain clear documentation of all spends and refunds for the records.

I have saved the statement having these transactions.
I was tensed because it was a UPI Transaction done via rupay cc, some say it will be counted some say it won't be counted.

 

[TaxWiser]

I have saved the statement having these transactions.
I was tensed because it was a UPI Transaction done via rupay cc, some say it will be counted some say it won't be counted.

If you used your RuPay credit card via UPI for transactions totaling ₹5–6 lakh, and all those transactions were fully refunded in the same billing cycle (so you paid nothing), here’s what matters for the ₹10 lakh annual spend reporting rule:

• RuPay Credit Card UPI transactions are treated the same as regular credit card spends for reporting, rewards, and tax scrutiny. So, UPI spends from your credit card are included in your annual credit card spend tally.
• However, only the net amount you actually pay on your credit card (i.e., after refunds) is considered for the ₹10 lakh threshold. If you received full refunds and didn’t pay anything, these transactions should not count towards the ₹10 lakh annual spend for tax department reporting.

Keep your statement and refund records safe in case the tax department asks for clarification. As long as your net payment is below ₹10 lakh, you should not face issues solely due to these refunded transactions-even if they were done via UPI using your RuPay credit card

(Source: Summarized Using Samsung Note Assist)

 

[AKtheBOSS]

If you used your RuPay credit card via UPI for transactions totaling ₹5–6 lakh, and all those transactions were fully refunded in the same billing cycle (so you paid nothing), here’s what matters for the ₹10 lakh annual spend reporting rule:

• RuPay Credit Card UPI transactions are treated the same as regular credit card spends for reporting, rewards, and tax scrutiny. So, UPI spends from your credit card are included in your annual credit card spend tally.
• However, only the net amount you actually pay on your credit card (i.e., after refunds) is considered for the ₹10 lakh threshold. If you received full refunds and didn’t pay anything, these transactions should not count towards the ₹10 lakh annual spend for tax department reporting.

Keep your statement and refund records safe in case the tax department asks for clarification. As long as your net payment is below ₹10 lakh, you should not face issues solely due to these refunded transactions-even if they were done via UPI using your RuPay credit card

(Source: Summarized Using Samsung Note Assist)

Thanks bro

 

[Azadirata]

Refunded credit card transactions (where you pay nothing in the end) are not counted towards the ₹10 lakh annual spend limit for tax department reporting, as long as your net payment remains below the threshold. Always maintain clear documentation of all spends and refunds for the records.

I have a current account as merchant. If i pay through the merchant Qr to my own account with my rupay credit cards and tranfer the amount to my fathers cash credit account of having 10 lakh loan( to avoid the interest ) every month back and forth (from card to loan and vise versa).

Will i have tax problems as my spending will reach 10 lakh in no time. But in reality I'm just rolling the money. And also do my father also get tax issues here

 

[TaxWiser]

I have a current account as merchant. If i pay through the merchant Qr to my own account with my rupay credit cards and tranfer the amount to my fathers cash credit account of having 10 lakh loan( to avoid the interest ) every month back and forth (from card to loan and vise versa).

Will i have tax problems as my spending will reach 10 lakh in no time. But in reality I'm just rolling the money. And also do my father also get tax issues here

Using your RuPay credit card to transfer money through your own merchant QR code to your father’s loan account might seem clever, but it could cause big headaches with banks and tax authorities. Here’s why:

The Problems

1. RuPay Credit Card Rules ​

● You’re supposed to use RuPay credit cards only for purchases (like groceries, bills, shopping).​

● Using it to transfer money to yourself or family might violate the rules and get flagged by NPCI (the payment system people).​

​

2. Tax Authorities Might Question You
● If you spend more than ₹10 lakh/year on your credit card, the Income Tax Department starts looking into where your money is coming from.
● If you’re just moving money back and forth without clear business transactions, it might be treated as “unaccounted income,” which means you could owe taxes on it!​

​

3. Your Father’s Loan Account Could Be Flagged
●If you keep sending money into his loan account without an official reason, banks might suspect something fishy (like money laundering).​

● If they can’t track where the money came from, it could cause problems for your father.​

Safer Ways to Handle This

● Don’t do circular transactions (moving money just to avoid interest).​

● Keep records if the money is actually business-related.​

● File your income taxes properly, showing any credit card spending related to business.​

● Talk to a tax expert before using unusual money-moving tricks.​

Bottom line? Banks and tax authorities don’t like loopholes, and this method could cause more trouble than it’s worth. It’s better to stick to clear, legal ways to manage money!

Hope this helps!

(Source: TaxConcept, Gemini AI)

 

[Azadirata]

So basically i need keep it under 10 lakh per annum for safety right.
Even though i heard that the banks would charge you for using rupay cc on merchant payment.is it true?. If yes how much do they charge. Does it have some threshold criteria where you have to pay more when the amount exceeds a certain limit

 

[TaxWiser]

So basically i need keep it under 10 lakh per annum for safety right.

Yes, for tax safety, keeping your total credit card spending and transfers under ₹10 lakh per year can help avoid automatic scrutiny, but banks and the tax department may still question unusual patterns or rolling transactions.

Even though i heard that the banks would charge you for using rupay cc on merchant payment.is it true?. If yes how much do they charge. Does it have some threshold criteria where you have to pay more when the amount exceeds a certain limit

There are no special thresholds where you pay more, except following scenarios:

• MDR fee(1-3%) applies only to transactions above ₹2,000 and can vary by merchant category and card type & No extra fee for payments below ₹2,000. This MDR fee is charged to the merchant, not directly to you, but some merchants may pass this cost on to you or increase prices to cover it.
• If you spend more than your RuPay credit card limit (overlimit spend), the bank may allow the transaction but will charge you an overlimit fee. This fee is typically 2.5% of the amount you exceed your limit by, or a minimum of ₹500–₹600, whichever is higher. The fee is usually charged once per billing cycle if you go over your limit. You must give consent for overlimit transactions; if you don’t, the transaction will be declined. Overlimit usage can also negatively impact your credit score if not managed well.

 

[Azadirata]

Yes, for tax safety, keeping your total credit card spending and transfers under ₹10 lakh per year can help avoid automatic scrutiny, but banks and the tax department may still question unusual patterns or rolling transactions.

There are no special thresholds where you pay more, except following scenarios:

• MDR fee(1-3%) applies only to transactions above ₹2,000 and can vary by merchant category and card type & No extra fee for payments below ₹2,000. This MDR fee is charged to the merchant, not directly to you, but some merchants may pass this cost on to you or increase prices to cover it.
• If you spend more than your RuPay credit card limit (overlimit spend), the bank may allow the transaction but will charge you an overlimit fee. This fee is typically 2.5% of the amount you exceed your limit by, or a minimum of ₹500–₹600, whichever is higher. The fee is usually charged once per billing cycle if you go over your limit. You must give consent for overlimit transactions; if you don’t, the transaction will be declined. Overlimit usage can also negatively impact your credit score if not managed well.

So even if i transfer to my qr account it will be a loss for me since mdr charges are 2-3%.
Is the mdr charges are only for extra amounts after 2000 or including 2000 when we transfer more than 2000

 

[TaxWiser]

So even if i transfer to my qr account it will be a loss for me since mdr charges are 2-3%.

Yupp

Is the mdr charges are only for extra amounts after 2000 or including 2000 when we transfer more than 2000

MDR is charged on the entire amount when the transaction exceeds ₹2,000, not just on the extra amount over ₹2,000. For example, if you pay ₹5,000, the MDR applies to all ₹5,000, not just the ₹3,000 above the threshold.

 

[Azadirata]