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Do you also shop a lot with credit card? If yes, be careful. The Income Tax Department closely monitors your spending habits, how much, where and how you are spending money. Especially when your credit card bill is ₹ 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 can not understand this by not matching your income and can send you notice.

What is the rule of income tax?

According to the Income Tax rules, if a person spends more than ₹ 2 lakhs with credit cards annually or pays more than ₹ 1 lakh, then the tax department gets this information directly. The department checks this data whether you have shown your earnings correct in your income tax return (ITR). If the expenses are seen more than your earnings, then the tax department is suspicious and they can send you notice. This notice is sent so that you can tell what is the source of your income for such a big expense.

What to do when you get notice?

If you get a notice from the Income Tax Department, then there is no need to panic, but do not ignore it at all. In the notice, you have to tell how you spent so much money. Was this your salary, got a gift, or spent with your savings? It is very important to give clear and correct answer. If you do not answer or give a satisfactory reason, then the department can also ask for a fine along with tax. Therefore, after getting the notice, take the advice of an expert as soon as possible and answer them correctly.

Easy ways to avoid income tax notice

The best way is to always pay your credit card bill in a digital way - like UPI, Net Banking or Debit/Credit Card. Try to minimize cash payment. Show your full income and big expenses clearly in your income tax return. If you have spent a big one, then keep it correct and complete. This will make it easier for the tax department to understand that there is no disturbance in your income and expenditure.