Income TAX related to personal credit card payment for business

[avishake]

Hi, my name is Avishake. I have one question. I am working for an IT company that doesn't have any cards. So, the company told me to pay with my card, and they will pay me. So, I was agreed. It is spent on my cards, and the company directly pay to that credit card. But later on, I learned that if I spent more than ten lacks from my credit card, the Bank would notify the Income Tax department. So, I told my company that this is not possible anymore as it will affect my ITR.
After a couple of months, the company arranged cards from the Bank. When they stopped spending, it was already more than ten lacks. As I filled the ITR for FY 22-23, I mentioned all my cashback and reward points from the credit card as other sources of income.
The company gave me all the invoices for what they spent and the company bank statement, showing that they paid directly to the credit card.
Before doing this, I asked my bank relationship manager if I could do this or not. They say you can, as it happened directly through a credit card and company bank account. It will not affect your ITR. But they misguided me, which I understand a few months later.
I accept it is my mistake that I do that. Whatever my income from those transactions is, I disclose it as cashback or reward points in the ITR.

I want to know what issue I may face and the solution. Also, please tell me how many years I need to keep those data.

Regards,
Avishake

 

[100bhagya]

Hi Avishake,

It seems like there might be a bit of a hiccup with the way your credit card transactions were handled for work expenses. Here's a breakdown of potential issues and some suggestions to help you navigate the situation:

Potential Issues:

1. Income Disclosure: The tax authorities may scrutinize your income disclosure if the credit card transactions and rewards are significant.
2. Misguidance: If you got some incorrect advice from your bank manager, it could complicate things.

Suggested Solutions:

1. Amend ITR: If you think your initial income disclosure isn't quite right, consider talking to a tax professional about amending your Income Tax Return.
2. Explanation Letter: Write a letter explaining the situation, including the misinformation you received and the steps you've taken to fix things. Include this letter when you submit your tax return.

Data Retention:

1. Keep Documents: Hang on to all your relevant documents—credit card statements, company invoices, and bank statements—for at least seven years. This helps you comply with the typical time frame for tax-related matters.
2. Save Communications: Hold onto any emails or letters you exchanged with the bank manager. These can support your case.

Consult a Tax Professional:

1. Seek Advice: Talk to a tax professional for personalized advice. They can guide you through fixing any mistakes and help prevent future issues.

In a nutshell, while there might be a bit of a challenge because of the initial confusion, taking proactive steps like amending your tax return, providing a good explanation, and seeking advice from a tax professional can help you sort things out. Just make sure to keep all your records in order for future reference.

Remember that tax rules can be a bit tricky, and this advice is general. For the best guidance, talk to a tax professional who can look at your specific situation.

 

[avishake]

Hi Avishake,

It seems like there might be a bit of a hiccup with the way your credit card transactions were handled for work expenses. Here's a breakdown of potential issues and some suggestions to help you navigate the situation:

Potential Issues:

1. Income Disclosure: The tax authorities may scrutinize your income disclosure if the credit card transactions and rewards are significant.
2. Misguidance: If you got some incorrect advice from your bank manager, it could complicate things.

Suggested Solutions:

1. Amend ITR: If you think your initial income disclosure isn't quite right, consider talking to a tax professional about amending your Income Tax Return.
2. Explanation Letter: Write a letter explaining the situation, including the misinformation you received and the steps you've taken to fix things. Include this letter when you submit your tax return.

Data Retention:

1. Keep Documents: Hang on to all your relevant documents—credit card statements, company invoices, and bank statements—for at least seven years. This helps you comply with the typical time frame for tax-related matters.
2. Save Communications: Hold onto any emails or letters you exchanged with the bank manager. These can support your case.

Consult a Tax Professional:

1. Seek Advice: Talk to a tax professional for personalized advice. They can guide you through fixing any mistakes and help prevent future issues.

In a nutshell, while there might be a bit of a challenge because of the initial confusion, taking proactive steps like amending your tax return, providing a good explanation, and seeking advice from a tax professional can help you sort things out. Just make sure to keep all your records in order for future reference.

Remember that tax rules can be a bit tricky, and this advice is general. For the best guidance, talk to a tax professional who can look at your specific situation.

Hi,
Thanks for your guide. I have all my documents with me. I have already started talking with a tax professional about this. I will share what my tax professional told me to do. I need to verify everything because I am not from a financial background. Because in the beginning, a bank person misguided me. But thanks for your quick reply.

 

[anuragmukherjee28]

Hi, my name is Avishake. I have one question. I am working for an IT company that doesn't have any cards. So, the company told me to pay with my card, and they will pay me. So, I was agreed. It is spent on my cards, and the company directly pay to that credit card. But later on, I learned that if I spent more than ten lacks from my credit card, the Bank would notify the Income Tax department. So, I told my company that this is not possible anymore as it will affect my ITR.
After a couple of months, the company arranged cards from the Bank. When they stopped spending, it was already more than ten lacks. As I filled the ITR for FY 22-23, I mentioned all my cashback and reward points from the credit card as other sources of income.
The company gave me all the invoices for what they spent and the company bank statement, showing that they paid directly to the credit card.
Before doing this, I asked my bank relationship manager if I could do this or not. They say you can, as it happened directly through a credit card and company bank account. It will not affect your ITR. But they misguided me, which I understand a few months later.
I accept it is my mistake that I do that. Whatever my income from those transactions is, I disclose it as cashback or reward points in the ITR.

I want to know what issue I may face and the solution. Also, please tell me how many years I need to keep those data.

Regards,
Avishake

@CAKaushik can help you ,try dming him personally here in the community ,