Income tax notice can also come on credit card bill, do not make this mistake 

Income Tax Rule– Do you also shop a lot using a credit card? If yes, then be careful. The Income Tax Department keeps a close eye on your spending habits to see how much, where and how you are spending money. Especially when your credit card bill is Rs 1 lakh or more. Nowadays people use credit cards more for expenses like EMI, online shopping, travel and food. But if you have paid such a big bill in cash, then it can be a matter of danger for you. The Income Tax Department may consider it as not matching your income and can send you a notice.

What is the income tax rule?

According to the Income Tax rules, if a person spends more than Rs 2 lakh annually through a credit card or pays a bill of more than Rs 1 lakh in cash, then this information is directly sent to the tax department. The department checks this data to see if you have shown your income correctly in your Income Tax Return (ITR). If your expenses are more than your income, then the tax department gets suspicious and can send you a notice. This notice is sent so that you can tell what is your source of income for such a huge expenditure.

What to do after receiving the notice?

If you get a notice from the Income Tax Department, there is no need to panic, but do not ignore it either. In the notice, you have to tell how you spent so much money. Was it your salary, a gift, or did you spend it from your savings? It is very important to give a clear and correct answer. If you do not answer or do not give a satisfactory reason, the department can demand a penalty along with tax from you. Therefore, on receiving the notice, take advice from an expert as soon as possible and answer correctly.

Easy ways to avoid income tax notice

The best way is to always pay your credit card bill digitally—like through UPI, net banking or debit/credit card. Try to minimise cash payments. Show all your income and major expenses clearly in your income tax return. If you have made any big expenditure, keep a correct and complete account of it. This will make it easier for the tax department to understand that there is no discrepancy in your income and expenditure.