Credit Cards and Income Tax in India: The ₹10 Lakh SFT Rule, Form 26AS/AIS Traps & How to Avoid Tax Notices

To,
The Assessing Officer / National Faceless Assessment Centre (NFAC),
Income Tax Department, Government of India.

Subject: Clarification regarding SFT-004 Credit Card Reporting in AIS for AY [Assessment Year, e.g., 2026-27]
PAN: [Your PAN Number]

Respected Sir/Madam,

With reference to the Annual Information Statement (AIS) reflecting credit card bill payments aggregating to Rs. [Total Amount Reported, e.g., 14,50,000/-] under SFT-004 reported by [Bank Name, e.g., HDFC Bank Ltd], I hereby submit the following factual clarification:

1. Out of the total reported payments of Rs. [Total Amount], an amount of Rs. [Reimbursed Sum, e.g., 8,20,000/-] pertains to official business and official travel expenses incurred on behalf of my employer, [Employer Company Name].

2. As per the corporate travel and expenditure policy of the employer company, employees are required to incur official expenses on personal corporate-linked credit cards and claim subsequent reimbursement.

3. The entire amount of Rs. [Reimbursed Sum] was fully reimbursed by my employer directly into my salary bank account (Account No: [Bank A/C No] with [Bank Name], IFSC: [IFSC Code]) via NEFT/direct bank transfer after due verification of official tax invoices.

4. Enclosed herewith are the relevant supporting documents:
   a) Corporate reimbursement ledger statements from the employer.
   b) Corresponding bank statement entries highlighting the reimbursement credits.
   c) Copies of the official travel and service tax invoices.

In light of the above factual and documentary evidence, the said amount does not represent personal consumption expenditure out of unexplained income. I kindly request you to record this submission and treat the AIS feedback as resolved.

Yours faithfully,
[Your Full Name]
[Mobile Number]
[Email Address]

To,
The Assessing Officer / Ward [Ward/Circle Number],
Income Tax Department,
[City, State].

Subject: Written Submission in response to Notice under Section 133(6) of the Income Tax Act, 1961
DIN / Reference No: [Notice DIN Number]
PAN: [Your PAN Number]

Respected Sir/Madam,

In compliance with the notice issued under Section 133(6) dated [Notice Date] requiring explanation regarding credit card payments of Rs. [Reported Amount] during Financial Year [2025-26], I respectfully submit:

1. During the subject financial year, I facilitated the booking of travel tickets and personal items for my relative, [Relative Name], who is my [Relation, e.g., Brother / Sister / Father], as defined under Section 56(2)(x) of the Income Tax Act, 1961.

2. The transaction amount of Rs. [Amount Swiped, e.g., 3,50,000/-] was paid via my credit card to avail a seasonal promotional offer.

3. My relative subsequently transferred the exact equivalent sum of Rs. [Amount Swiped] directly from their bank account (Account No: [Relative Bank A/C] with [Relative Bank Name], PAN: [Relative PAN]) to my bank account on [Date] via IMPS/NEFT reference number [Transaction UTR/Reference No].

4. This transaction represents a pure cost reimbursement between specified relatives without any income element or gift element as per the provisions of Section 56(2)(x) of the Act.

5. Enclosed are:
   a) Confirmation letter and PAN copy of [Relative Name].
   b) Bank statement of the relative evidencing the source of transfer.
   c) My bank statement demonstrating the receipt and immediate settlement of the card statement.

I request your good self to kindly accept this explanation and drop any further proceedings in this regard.

Yours faithfully,
[Your Full Name]
Date: [Date]

To,
The Nodal Grievance Officer / SFT Reporting Unit,
[Bank Name, e.g., ICICI Bank Limited / HDFC Bank Limited],
[Bank Branch / Registered Address].

Copy to:
Systems Directorate, Directorate General of Income Tax (Systems),
E-Filing Portal Support, New Delhi.

Subject: Request for Correction of Duplicate SFT-004 Credit Card Reporting in AIS for FY [2025-26]
Credit Card Account No: [Last 4 Digits of Card]
Customer ID / CIF: [Your Customer ID]
PAN: [Your PAN Number]

Dear Sir/Madam,

Upon inspecting my Annual Information Statement (AIS) for Assessment Year [2026-27], I noted that your institution has erroneously reported duplicate entries under code SFT-004.

Specifically:
- Entry Reference 1: Rs. [Amount, e.g., 5,50,000/-] reported on [Date 1].
- Entry Reference 2: Rs. [Amount, e.g., 5,50,000/-] reported on [Date 2].

The actual total payment made against my card account during the entire financial year was only Rs. [Actual Total Amount], as substantiated by the enclosed consolidated annual card statement and bank ledger debits.

Your duplicate submission has artificially inflated my financial transaction profile on the Income Tax Department's Project Insight database, exposing me to unwarranted compliance scrutiny.

I request you to immediately file a Revised / Correction SFT Return under Rule 114E(7) and issue a formal confirmation letter to me within 15 business days.

Yours sincerely,
[Your Full Name]
Encl: Consolidated Annual Account Statement