Credit card spends crossing 10 lakh — will income tax department come after me?

Question

Hi everyone, I'm Ananya, working in Bangalore, take home around ₹80k per month. Lately I've been putting most of my expenses on credit cards — groceries, travel, online shopping, even paid my cousin's wedding vendor bills on my card to help him out (he returned cash later). I just calculated and my total credit card spends this year might cross ₹10 lakh easily.

Somewhere I read that banks report credit card transactions above ₹10 lakh to the income tax department under SFT (Statement of Financial Transactions). Now I'm a bit nervous. My ITR shows salary income only, no other source declared. The wedding vendor payments especially are worrying me because that cash came back but it looks like income on paper maybe?

Is this actually a big deal? Will I get a notice? Has anyone here been through this? I file ITR-1 every year, never had issues before. Should I talk to a CA or am I overthinking this?

Answer 1

Honestly, you're not overthinking — but you're also not in as much trouble as you think. Let me break this down properly.

Yes, banks do report credit card spends above ₹10 lakh in a financial year to the Income Tax Department under SFT (Schedule of Financial Transactions), formerly called AIR. This is a real thing. Your PAN gets flagged in the AIS (Annual Information Statement) on the IT portal. But here's the key — getting flagged in AIS is NOT the same as getting a notice. It just means the department has visibility.

Now the real question is whether your spending matches your declared income. Your take home is ₹80k/month, which means roughly ₹9.6 lakh annually in hand. Gross salary is probably ₹12–14 lakh depending on deductions. Spending ₹10 lakh on card from a ₹12–14 lakh gross salary is not suspicious at all. People spend money, that's normal.

The wedding vendor situation — look, this happens all the time. You paid on card, cousin returned cash. This is NOT income. But if you're questioned, you need to show that the cash deposits in your account match the amount he returned. Keep any UPI messages, WhatsApp texts, whatever proof you have. Don't stress unless you actually deposited that cash in the bank and it shows up without explanation.

What you should actually do right now:
1. Log in to incometax.gov.in and check your AIS. See what's already reflected there.
2. Make sure your ITR for this year shows correct salary, Form 16 matches.
3. Keep all credit card statements, they're your spending record.

One thing most people get wrong — they assume the IT department is actively scrutinizing every flagged PAN. They're not. It's largely automated. Notices under Section 143(2) or 148 happen when there's a serious mismatch between income and assets/spending that's unexplained.

That said, if your annual credit card bill consistently crosses ₹10–12 lakh while your ITR shows ₹10 lakh income, over 2-3 years that pattern can trigger an automated query. Usually it comes as an e-verification under Section 133(6), not a full notice. You just respond explaining the spending is from salary.

My recommendation: Check your AIS right now, cross-check with your Form 26AS, and file your ITR honestly and on time. You genuinely don't need a CA for this situation unless you start doing something more complex. You're fine.