Cash backs are taxable -Income Tax rules on e-wallet or UPI transactions: All you need to know

198°
Deal Subedar
70
2399
8

Income Tax rules on e-wallet or UPI transactions: All you need to know

https://www.timesnownews.com/amp/business-econo...

29 Comments  |  
12 Dimers
  • Sort By
9
2265
23

Third class news article by times now. It gives a sense to the reader that whatever you transact through UPI is taxable.

70
2399
8
drsa478 wrote:

Third class news article by times now. It gives a sense to the reader that whatever you transact through UPI is taxable.

Everything you do in upi isneed to reported. Not taxable.

But every cash back and vouchers are taxable.

9
2265
23
Expand
Bk100 wrote:

Everything you do in upi isneed to reported. Not taxable.

But every cash back and vouchers are taxable.

I know bro. I was talking about the article only. Vu for the share. plus1

70
2399
8
Expand
drsa478 wrote:

I know bro. I was talking about the article only. Vu for the share. plus1

Article writers some times go overboard.

But it is correct in cash back and voucher taxable point.

Even credit card reward points conversion is also taxable.

Out dd dimes redemption is also taxable. 😂

548
12785
166

99% wrong info smile

70
2399
8
abhishek012 wrote:

99% wrong info smile

1%correct info. 😂

I am only wanted to discuss about cash backs and vouchers.

So not posted article content here as other info is misleading. 😂

548
12785
166
Expand
Bk100 wrote:

1%correct info. 😂

I am only wanted to discuss about cash backs and vouchers.

So not posted article content here as other info is misleading. 😂

For instance, rewards that are earned from a credit card points and cashbacks are generally considered a rebate/discount and not a taxable income. Therefore, if you earn 2% on Rs.100 purchase, that Rs. 2 is not extra income but considered Rs. 2 rebate on your Rs. 100 purchase.

56
397
2

Har chiz me tax sala jeye ke nhi.

70
2399
8
Expand
abhishek012 wrote:

For instance, rewards that are earned from a credit card points and cashbacks are generally considered a rebate/discount and not a taxable income. Therefore, if you earn 2% on Rs.100 purchase, that Rs. 2 is not extra income but considered Rs. 2 rebate on your Rs. 100 purchase.

When you convert 10000 points and get some instant voucher then it is taxable. I dont think it is exempted rebate income.

9
2265
23
Expand
Bk100 wrote:

Article writers some times go overboard.

But it is correct in cash back and voucher taxable point.

Even credit card reward points conversion is also taxable.

Out dd dimes redemption is also taxable. 😂

My nephew exchanged his 50 rupees note with 100 rs note from me. Even that is taxable. wink smile (As per the writer)

50
356
3
Expand
drsa478 wrote:

My nephew exchanged his 50 rupees note with 100 rs note from me. Even that is taxable. wink smile (As per the writer)

Aj maine dukandaar ko 20rs. dekar 10 rs. ka samosa khaya. jo 10rs. vapas mile vo bhi taxable.

50
303
5
Expand
Bk100 wrote:

Article writers some times go overboard.

But it is correct in cash back and voucher taxable point.

Even credit card reward points conversion is also taxable.

Out dd dimes redemption is also taxable. 😂

What about 99-200 redemption charges that we pay.
Usko minus karke tax padna chahiye stuck_out_tongue_winking_eye

9
2265
23
Expand
kukdookoo wrote:

Aj maine dukandaar ko 20rs. dekar 10 rs. ka samosa khaya. jo 10rs. vapas mile vo bhi taxable.

Aur us dukaandar ko 20 mile. Uske 20 taxable. wink smile

674
5258
57
Expand
abhishek012 wrote:

For instance, rewards that are earned from a credit card points and cashbacks are generally considered a rebate/discount and not a taxable income. Therefore, if you earn 2% on Rs.100 purchase, that Rs. 2 is not extra income but considered Rs. 2 rebate on your Rs. 100 purchase.

Bhai what you said is from US IRS rules, in India any cashback not instant discount is considered as gift income from strangers which is taxable on entire amount if total crosses more than 50k in a year(assuming you are above the basic tax exemption limit of 2.5 lakh else there is zero tax). Me & @panchabhut once discussed it thoroughly in a thread with lots of income tax rules quotes & examples. smile
https://www.desidime.com/discussions/amazon-pay...
see from p2 onwards.

2,110
8762
84
Moderator

ITD to Gormint:

Sir, ye cashback wala *chillar income tax ke ambit se chhuta hua hai. Ispe bhi tax wax lagwa dein kya??


https://cdn0.desidime.com/attachments/photos/679111/medium/phir-hera-pheri-paisa-hi-paisa-hoga-meme-template-1024x535.jpg?1618818459

Gormint:


https://cdn0.desidime.com/attachments/photos/679112/medium/Mast-Plan-Hai-meme-template-of-Phir-Hera-Pheri-728x409_2.jpg?1618818492

70
2399
8
deb3l wrote:

ITD to Gormint:

Sir, ye cashback wala *chiller income tax ke ambit se chhuta hua hai. Ispe bhi tax wax lagwa dein kya??


https://cdn0.desidime.com/attachments/photos/679111/medium/phir-hera-pheri-paisa-hi-paisa-hoga-meme-template-1024x535.jpg?1618818459

Gormint:


https://cdn0.desidime.com/attachments/photos/679112/medium/Mast-Plan-Hai-meme-template-of-Phir-Hera-Pheri-728x409_2.jpg?1618818492

There are money rotators who makes lot of money in reward points and that amount is taxable if his total income crosses 2.5 lakhs. 😂

50
20
1
Mufasa wrote:

Har chiz me rax sala jeye ke nhi.

Ruko abhi sas lene pe tax nahi laga he

50
20
1
Expand
Bk100 wrote:

There are money rotators who makes lot of money in reward points and that amount is taxable if his total income crosses 2.5 lakhs. 😂

I do that for cashback but never earned 2.5 laks
2-3k per month

70
2399
8
Expand
sanketpero wrote:

I do that for cashback but never earned 2.5 laks
2-3k per month

If your total income crosses 2 . 5 lakhs and these gift voucher value crosses 50000 then this gift voucher value need to be added to your account.

2,110
8762
84
Moderator
Expand
Bk100 wrote:

There are money rotators who makes lot of money in reward points and that amount is taxable if his total income crosses 2.5 lakhs. 😂

Bhai to phir chor ko pakdo naa.. ye to gaon khali karane wali baat hui.

#KareKoiBhareSab relieved


PS: Baat cashback pe ho rahi hai ya reward points pe!? rolleyes

70
2399
8
Expand
deb3l wrote:

Bhai to phir chor ko pakdo naa.. ye to gaon khali karane wali baat hui.

#KareKoiBhareSab relieved


PS: Baat cashback pe ho rahi hai ya reward points pe!? rolleyes

Cashbacks – vouchars – and rewards points.
Yeh teenke income ko milke taxable income ki baat ho rahi hai. 😂

9
2265
23
Expand
deb3l wrote:

Bhai to phir chor ko pakdo naa.. ye to gaon khali karane wali baat hui.

#KareKoiBhareSab relieved


PS: Baat cashback pe ho rahi hai ya reward points pe!? rolleyes

OP ki galti nhi hai. Article writer is ultra pro max version of IRS with CA degree . grinning

50
1149
9

Here’s what I understood:
If I get cash back to my bank account it becomes taxable if I get over 50k of all gifts.

No idea why you guys are worried about reward points and all, which can be converted to amazon vouchers and at its best statement credit which is still not going to your bank account unless you money rotate.

I maybe wrong, but the news article seems to be talking about money going to bank

674
5258
57

https://www.desidime.com/discussions/amazon-pay...

Sec 56(2)(x)(a) covers money, 56(2)(x)(b) covers immovable properties and 56(2)(x)© covers properties other than immovable property and cash.
Reward points by themselves are not either cash or property. So as long as they remain reward points, they are outside the scope of sec 56(2). But when they are converted to Gift Vouchers, they becomes cash equivalent property as defined by RBI guidelines on Prepaid Payment Instruments, thus coming under the scope of Sec 56(2).

@Bk100, that article is clickbait type, above is the correct info(income tax rules don’t change often other than adjustment in limits most of the time).

@Seinfeld see above explanation, it is not just cash in account which comes under the definition of “gift”.

50
1597
11

“tax mamlo ka jaankar” ho koi to sahi details ke sath post karo!
Idhar confusion jyada hai!

674
5258
57
pradeep.gr wrote:

“tax mamlo ka jaankar” ho koi to sahi details ke sath post karo!
Idhar confusion jyada hai!

@panchabhut bhai jara detailed section 56 links post kar do smile

476
4370
52

Total cashback/points redemption etc above Rs.50,000 per year, from all sources taken together, is fully taxable as “gift”.
The IT return Form 2 requires the assessee to provide following,
Income of the nature referred to in section 56(2)(x) which is chargeable to tax (di + dii + diii + div + dv)
d(i) Aggregate value of sum of money received without consideration
d(ii) In case immovable property is received without consideration, stamp duty value of property
d(iii) In case immovable property is received for inadequate consideration, stamp duty value of property in excess of such consideration
d(iv) In case any other property is received without consideration, fair market value of property
d(v) In case any other property is received for inadequate consideration, fair market value of property in excess of such consideration

So it is not just cash but cash+cash equivalent. Gift vouchers and other items redeemed against reward points come under d(iv). As long as it is just reward points, it has no value. But the moment it is converted to cash equivalent, it comes under scanner.

Direct Discount at the time of purchase is different as that reduces the price of the product. When Amazon gives 5% direct discount on pantry for using Amazon pay card, that is reduction is price. When it gives 5% cash back, that is Cash equivalent without consideration. Similarly, Frequent Flyer miles redeemed against flight tickets of the same airlines are discount vouchers that reduce the price of the product. However, where Frequent Flyer miles are converted to Gift vouchers, that become cash equivalent without consideration. Rebate is where there is a direct discount on the price of a product. There is no tax on rebate. Basic test of “rebate” is whether GST is applicable on the net value or the gross value. If its on net value, then it is rebate, if it is on gross value, then it is not a rebate.

Amazon GV is added to Amazon Pay and can be used as Cash for future purchases. It is treated as a form of payment and not as discount from price of the original purchase for which it is given. Amazon GV obtained through 3rd party redemption are also freely transferable just like cash and can be used by anyone. So it is Cash Equivalent received without consideration. Cashbacks are not rebate, except in situations where the cashback is credited immediately to the same card account on completion of transaction. Conversion of reward points into 3rd party GV is also not rebate. Same concept applies to Cashbacks received for UPI transactions.

The cashback and reward points are still a grey area in Indian tax system. However, the last six years the Indian external debt have practically doubled. So Govt is trying to get as much money as possible and CBDT is trying new sources of revenue. So they are closing all loopholes. Their systems are already well geared to link all transactions and identify unusual transactions. Rules are already there, both in the Income Tax Act/Rules and in RBI’s Prepaid Payment Instruments (PPI). Only they are not fully enforced. No additional rules are required to enforce them. Only an internal administrative decision is enough.

All Gift vouchers are covered under RBI PPI guidelines. They are modes of payment, just like cash, credit card and cheque, and definitely not discount. GST is levied on the full value of the sale, not after adjusting the value of the gift vouchers. In case of direct discount, GST is levied on the net price after discount. Irrespective of whether the gift vouchers are applied at the time of sale or earlier, they do not affect the taxable value of the sale, so they are not discounts. And the issuing authority of these gift vouchers, as defined by RBI, is different from the company which is redeeming the points, so they are definitely 3rd party instruments.

70
2399
8
panchabhut wrote:

Total cashback/points redemption etc above Rs.50,000 per year, from all sources taken together, is fully taxable as “gift”.
The IT return Form 2 requires the assessee to provide following,
Income of the nature referred to in section 56(2)(x) which is chargeable to tax (di + dii + diii + div + dv)
d(i) Aggregate value of sum of money received without consideration
d(ii) In case immovable property is received without consideration, stamp duty value of property
d(iii) In case immovable property is received for inadequate consideration, stamp duty value of property in excess of such consideration
d(iv) In case any other property is received without consideration, fair market value of property
d(v) In case any other property is received for inadequate consideration, fair market value of property in excess of such consideration

So it is not just cash but cash+cash equivalent. Gift vouchers and other items redeemed against reward points come under d(iv). As long as it is just reward points, it has no value. But the moment it is converted to cash equivalent, it comes under scanner.

Direct Discount at the time of purchase is different as that reduces the price of the product. When Amazon gives 5% direct discount on pantry for using Amazon pay card, that is reduction is price. When it gives 5% cash back, that is Cash equivalent without consideration. Similarly, Frequent Flyer miles redeemed against flight tickets of the same airlines are discount vouchers that reduce the price of the product. However, where Frequent Flyer miles are converted to Gift vouchers, that become cash equivalent without consideration. Rebate is where there is a direct discount on the price of a product. There is no tax on rebate. Basic test of “rebate” is whether GST is applicable on the net value or the gross value. If its on net value, then it is rebate, if it is on gross value, then it is not a rebate.

Amazon GV is added to Amazon Pay and can be used as Cash for future purchases. It is treated as a form of payment and not as discount from price of the original purchase for which it is given. Amazon GV obtained through 3rd party redemption are also freely transferable just like cash and can be used by anyone. So it is Cash Equivalent received without consideration. Cashbacks are not rebate, except in situations where the cashback is credited immediately to the same card account on completion of transaction. Conversion of reward points into 3rd party GV is also not rebate. Same concept applies to Cashbacks received for UPI transactions.

The cashback and reward points are still a grey area in Indian tax system. However, the last six years the Indian external debt have practically doubled. So Govt is trying to get as much money as possible and CBDT is trying new sources of revenue. So they are closing all loopholes. Their systems are already well geared to link all transactions and identify unusual transactions. Rules are already there, both in the Income Tax Act/Rules and in RBI’s Prepaid Payment Instruments (PPI). Only they are not fully enforced. No additional rules are required to enforce them. Only an internal administrative decision is enough.

All Gift vouchers are covered under RBI PPI guidelines. They are modes of payment, just like cash, credit card and cheque, and definitely not discount. GST is levied on the full value of the sale, not after adjusting the value of the gift vouchers. In case of direct discount, GST is levied on the net price after discount. Irrespective of whether the gift vouchers are applied at the time of sale or earlier, they do not affect the taxable value of the sale, so they are not discounts. And the issuing authority of these gift vouchers, as defined by RBI, is different from the company which is redeeming the points, so they are definitely 3rd party instruments.

👍

Missing