Income tax and its implication on the usage of credit cards for friends, and others.
Now there are a few things that I am already taking into consideration:
1) Income < Expense( Done on the credit card)
2) Why the card is being used when the income is less: A friend is in need of money for his business so swiped on his POS and later returned the money; buying things on behalf of a friend( billed on friends name) to give him some advantage of discount available on my card and later he returned that money.
3) Loading it in the wallet etc and rotating my money for Reward points etc.
Now, in none of the above scenarios, any real income is escaping assessment or not being disclosed. As the transactions done for friends are credited to my account to repay the CC bill and transactions done for rotation are again credited to my account so the cash flow is available.
The easiest solution to the above is not to use the CC, Use it for less than one's income, don't use it for friends and others, don't use it for rotation to earn reward points, etc
But what if one still wants to use the Credit card and do all of the above transactions and yet wants to safeguard himself from an income tax notice and implication?
Firstly Looking for solutions in the scenario of accounting and filing of returns for the relevant financial year, to make sure that I don't get IT notice.
Secondly, in case of notice, what explanation or paper trial should I resolve this matter in one go?
Thanks in advance
CAclubindia
