Credit Card Users Alert! Tax Dept Watching Your Spending - Avoid Costly Mistakes

• Income Tax Department is closely monitoring credit card expenses, flagging 'fictitious expenses' for reward points or cashback.
• Using cards for friends/relatives, cash withdrawals, or circular money transfers via rent/wallets can trigger tax scrutiny.
• Discrepancies between declared income and high credit card spending (travel, luxury) immediately alert the tax system.
• Misusing HRA claims by paying rent to relatives via credit card or using personal cards for business without proper records can lead to issues.
• Reward points converted to cash/cashback exceeding limits may be considered taxable income; ensure expenses match declared income and are well-documented.

Why It Matters: Use credit cards wisely; misuse for rewards can lead to tax notices and financial trouble.