AIR Reporting Needed ?

Hello Friends Please give me sugession on following case.

My Father got a credit card on his name and a Addon Card in my name. Total expense on that card for Fy2010-2011 is 3.5Lac. Normaly It already crossed the 2Lac limit. Actualy card is used by me and my brother for various purposes, and bills are paid by us only.Since the main card belongs to my father who should file the AIR.

If we don't file AIR what will happen. He is a pensioner and his pension is not in taxable range. Will Tax department send notice for not filing AIR. What is actual purpose of AIR, by filing AIR we have to pay tax on funds used on credit cards ?

Replies (1)

Hi,

1. Section 285 creates obligation on the specified person who is reponsible to maintain the books of accounts to report to Income tax authority to report on the specified financial transaction which is registered or recorded by him.

2. In your case Bank is the reporting authority and not you.

3. Reportable transaction is Payments made by any person against bills raised in respect of a credit card issued to that person, aggregating to two lakh rupees or more in the year.

4. Only the aggregate of all the payments by a person to the credit card company is required to be reported as one transaction and date of transaction is to be the last date of the financial year.

5. No tax is leviable on this.

6. Purpose is to track high value transaction to track the tax evaisioner.

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