Paying Over ₹50,000 on Your Credit Card? Read This Before Your Next Payment!

You swipe. You pay. You forget. But if your credit card bill payments exceed ₹50,000, you might unknowingly trigger a compliance alert that brings you under the government’s lens.

Here’s what every credit card user must know in 2025:

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Why is ₹50,000 the Magic Number?

Under the Statement of Financial Transactions (SFT) reporting framework, banks and financial institutions are required to report the following to tax authorities:

• Cash payments above ₹1 lakh towards credit card bills.
• Aggregate payments (cheque, UPI, NEFT, etc.) over ₹10 lakh in a financial year.

So, frequent high-value payments of even ₹50,000 or more catch attention, especially when inconsistent with your declared income.

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What Happens After That?

If a mismatch is found between your reported income and your credit card spending, the tax department may issue a notice under:

• Section 133(6) – asking for information and supporting documents.
• Section 142(1) – seeking explanations for high-value payments before scrutiny assessment.

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How to Stay Safe?

1. Keep a Paper Trail
Always retain:

• Salary slips/business income proofs
• Credit card statements
• Bank statements showing source of funds

2. Don’t Ignore Notices
If you receive an email or SMS asking for clarification, log into the Income Tax portal and respond under the “Compliance” section. Missing the deadline can lead to deeper scrutiny.

3. Match Income with Lifestyle
It’s okay to spend, but make sure your declared income reflects your spending pattern. That’s what algorithms check first.

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What If You Receive a Notice?

Step 1: Check whether it’s under Section 133(6) or 142(1).

Step 2: Draft a reply explaining the source of the funds used to make the payments.

Step 3: Attach relevant documents – Form 16, ITR, bank proofs, etc.

Step 4: Submit the reply via the Income Tax e-filing portal or consult a tax expert for assistance.

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Final Word:

Don’t let a routine credit card payment turn into a stressful government query. If you’re spending big, keep your records tight. As the saying goes: “File smart, spend smarter.”