Case study: credit card spending

Your bank statement records exactly one thing about a credit card: the bill payment. It cannot record what the card was used for, because that happened on the card, and the card statement is a different document.

So a filer sees a Rs 60,000 payment to their card, correctly categorised as not an expense, and quite reasonably objects: "but that money is gone, and the hosting I paid for is a real business cost." Both things are true. The categorisation is right and the deduction is real — the problem is that half the ledger was never entered.

Why not just call the bill payment the expense

It is what most people do, and it is wrong in three ways that all bite at filing time:

1. It is one lump. Business hosting and a streaming subscription come off the same card, and only one of them is deductible. A single row cannot say which is which.
2. It lands in the wrong year. A charge in June paid in July is a June expense, not a July one.
3. It is only ever approximately right. The total you paid equals the total you spent only in a year where the card's opening and closing balances happen to match. If your balance grew Rs 200,000 over the year, your deduction is out by Rs 200,000.

And the document behind the deduction becomes a card payment rather than an invoice, which is the wrong evidence for the wrong thing.

The setup, once

Register the card as an account.

1. Go to Manage accounts and choose Add an account.
2. Kind: Credit card.
3. Issuer: the bank that issued it.
4. Card number: as your statement prints it, masking and all — for example 4025xx******1234. The last four digits are how a bill payment finds its way to the right card automatically.
5. Owed on 1 July: what was outstanding at the start of the year, as a positive number. Leave it at 0 if the card was clear.

One account per card, never one for all of them. Cash is one pile because cash is fungible; cards are not. Each card is a separate creditor with its own statement and its own closing figure — and that closing figure is the only check that tells you a charge is missing.

Reading a card's balance. A charge is money out, so a card ledger sits below zero and the size of that negative is what you owe. The Credit cards screen turns that around and shows it as charges, bills paid and outstanding, all as positive numbers.

Every month, two separate jobs

They are separate on purpose, and doing the first without the second is the one state to avoid.

1. Record the bill payment against the card

1. Open Credit cards for the tax year.
2. Under Bill payments waiting for a card, find the payment.
3. Check the card. It is preselected when the statement line prints digits matching exactly one of your cards — check it anyway, because putting a payment on the wrong card misstates two balances at once and neither looks wrong.
4. Press Record against this card.

That reduces what the card owes and stops the payment being counted as spending.

2. Enter what the card was actually used for

1. On the same screen, Enter the charges on a card.
2. Choose the card.
3. For each line, read off your card statement:

- Date charged — the date the card was charged, not the date you paid the bill. This is what puts a June charge in the right tax year. - What it was — the merchant, as you would recognise it. - Amount. - Category — this is the whole point. For example: - domain renewals, hosting, PKNIC through a reseller, business software → Debit > Business Expense > Software / SaaS / Hosting - streaming, personal apps, a gym → Debit > Household & Living > Subscriptions (streaming, software, gym) - the card's own annual fee or markup → Debit > Financial & Statutory > Bank Charges & Fees

1. Press Add these charges. Eight lines at a time; leave spare ones blank.

Either all lines are saved or none are, so one bad line never leaves you working out which of eight landed.

On personal-looking subscriptions. A streaming subscription belongs under personal Subscriptions here. If your consultant treats it as a business IT charge, that is their call and their signature on the return — move it if they ask. The app will not assume a position it cannot defend.

The check that proves nothing is missing

On the Credit cards screen, each card shows Outstanding — charges you have entered, minus bills you have recorded, plus what was owed on 1 July.

Compare it against the closing balance printed on your card statement:

• "Matches your card statement" — you have entered everything.
• "X of charges missing" — that amount of spending is currently in no tax return. Go back and enter the rest.
• "No closing figure entered" — nothing to check against. Add the card's closing figure under Accounts & balances and the check turns on.

That figure is the honest answer to "have I entered everything?", and it is the same reconciliation the rest of the app is built on, pointed at a card.

The one dangerous in-between state

There is a moment where the numbers are genuinely wrong: charges entered, bill payment not yet recorded. Both count, so that spending is doubled.

It is why the screen leads with Bill payments waiting for a card and why the tax-year page shows a count beside Credit cards. Clear that list and the state resolves itself.

• Neither done — the payment counts as spending, because it is the only record you have. No charges exist yet.
• Charges entered, payment not recorded — both count, so that spending is doubled. This is the state to get out of.
• Both done — the payment counts as nothing and the charges carry it. Correct.

Made a mistake

• Wrong card — undo the payment on the Credit cards screen and record it against the right one. The row keeps its category; only the card was wrong.
• Wrong charge — it is an ordinary hand-entered row on the card's ledger. Open the ledger, filter to that card, and edit or delete it like any other.

What is not built yet

There is no reader for credit card statements, so charges are typed in. If that is a lot of work every month, say so — a card that is mostly the same handful of recurring charges is exactly the case rules were built for, and once a charge is categorised once, the same merchant can be matched automatically next time.