Why Tax Officers Are Asking for Bills of Your Haircut, Perfume and Groceries — What You Must Reply

Many taxpayers across the country have recently received unusual notices from the Income Tax Department asking for details of their personal expenses, including grocery bills, haircut costs, perfume purchases, fuel expenses and even small cash transactions. If you have also been asked to justify such daily-life spending, there is no need to panic. These queries are part of a stricter verification process that the department has implemented to match lifestyle expenses with reported income.

Why Is the Tax Department Seeking Personal Expense Details?

Under Section 142(1) of the Income Tax Act, assessing officers are legally empowered to seek a complete breakdown of a taxpayer’s personal expenditure. These notices are triggered when the system detects inconsistencies, such as:

• Spending patterns that appear higher than declared income

• Unusual gaps between cash withdrawals and card expenses

• A mismatch in the taxpayer’s AIS, TDS or bank transaction data

The department compares every financial detail — from bank statements to card payments and cash expenses — with information reported in AIS and income tax returns. If your lifestyle spending does not align with your officially declared income, the system automatically flags it for clarification.

Who Is More Likely to Receive Such Notices?

Tax professionals say these notices are most commonly sent to:

• Individuals who have high income but low bank withdrawals

• People with heavy cash expenses

• Business owners, freelancers and professionals

• Taxpayers whose spending patterns fluctuate significantly

Whenever the department suspects that income may be understated or expenses are inconsistent, it issues a query to cross-verify the lifestyle of the taxpayer.

What Type of Expenses Are Being Asked for?

The notices typically demand details of everyday spending, which helps the department gauge your standard of living. These can include:

• Monthly grocery and household purchases

• Salon and haircut bills

• Perfume or personal-care expenses

• Fuel expenses

• Small cash payments made without receipts

Essentially, any expense — big or small — that reflects your lifestyle can be asked for, especially if it does not match your declared income.

Why Is the Department Doing This?

The primary purpose of these notices is not to trouble taxpayers but to ensure that no income is being concealed. If a taxpayer fails to justify personal spending patterns, the department may treat household expenses as part of their income. This could result in:

• A higher taxable income

• Additional tax liability

• Interest and potential penalties

In many cases, people maintain no proper record of cash expenses — like vegetables, salon visits, tips, or daily household purchases. When personal and business cash expenses get mixed, even honest taxpayers may come under scrutiny.

What Should You Do If You Receive Such a Notice?

If you receive a notice asking for personal expense details, here’s how to respond effectively:

1. Verify the Notice on the Income Tax Portal

Before taking any action, log in to the income tax portal and confirm the authenticity of the notice.

2. Gather All Supporting Documents

Collect all relevant financial documents, such as:

• Bank statements

• Credit/debit card statements

• Rent receipts or EMI records

• Electricity and water bills

• Any available bills or records of regular expenses

3. Prepare a Clear and Logical Explanation

Provide consistent and reasonable clarifications for all expenses. Even if you do not have bills for smaller purchases, offer a practical breakdown of your monthly household spending.

4. Respond Within the Given Deadline

Delay in responding can lead to stricter scrutiny. A timely and transparent reply usually resolves the issue smoothly.

Bottom Line

The Income Tax Department has increased lifestyle-based verification, and even small personal expenses now contribute to your tax profile. Keeping proper records, maintaining a clear distinction between personal and business spending, and ensuring that your expenses align with your declared income can help you avoid complications. If a notice arrives, stay calm, prepare your documents and respond promptly — this is the best way to prevent penalties and ensure a hassle-free assessment.