If you do big transactions through credit card in order to take advantage of the offers, then you may have to suffer its loss. Excessive use of credit cards can damage your CIBIL score. At the same time, the Income Tax Department also keeps an eye on transactions involving large amounts.
New Delhi. Nowadays most people use credit cards to manage their expenses. Getting a credit card has now become much easier than before and many types of offers are also given by the bank on this. This is the reason that credit card speding is increasing very fast in the country. But, do you know that excessive use of credit card can create many problems for you.
Actually, excessive use of credit card can spoil your CIBIL score. On the other hand, the Income Tax Department can also keep an eye on you if you do a large amount of transaction through credit card. Apart from this, you may also face problems while filing ITR.
There is an impact on the CIBIL score
Excessive use of credit cards affects your CIBIL score. This can spoil your score, due to which you may have to face difficulties in taking loans etc. in future. When you check the CIBIL score record, there you will see a column of credit card utilization. This column has a great impact on your CIBIL score. The more you use the credit card, the more impact is visible in the CIBIL score.
Income tax keeps an eye on big transactions
The Income Tax Department keeps an eye on people who do big transactions through credit cards. According to the rules of the Income Tax Department, the report of transactions above Rs 10 lakh has to be given to the banks through Form 61A. At the same time, under Form 26A, along with the information about all your expenses, you also have to give information about the expenses from the credit card to the banks. If you do not do this, then the Income Tax may have an eye on you and he can take action under the rules.
Keep these things in mind to avoid it:
If you do a transaction of more than Rs 10 lakh through a credit card, then 1% of it has to be paid as tax. In such a situation, you need to be careful while doing big transactions with credit cards. If you do not want to come in the eyes of income tax, then be careful while doing transactions of more than one lakh rupees. Don’t spend big with your credit card in exchange for reward points. While filing ITR, also tell about the high value transactions done from the credit card.
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