Diwali and Dussehra just passed and during the
festive season retailers online as well as offline retailers offered
various discount and cashback offers. Most online retailers offered some
sort of cashback deals to their customers. These cashback offers seem
like a good chance of saving some money on your shopping but do you know
that it could also warranty an income tax notice.
Yes, for those who are not aware, cashbacks could be taxable in certain situations and if you do not
know the rules you might get a notice from the I-T department for under-reporting your income. It may be noted that any monetary benefit received by an individual as either gifts or cashback from a non-relative might be subject to income tax under the 'Income from other sources' category or 'Profits and Gains from business or profession' category.
Section 56(2)(x) of the Income Tax Act states that a tax is levied if any sum of money is received without consideration. This tax is levied only if the aggregate value of such money exceeds Rs 50,000 during the financial year. This means that if you receive a monetary benefit of more than Rs 50,000 in a financial year by way of either credit cards, e-wallets etc, the provision of gift tax can be invoked.
In order to make sure that you are not sent a notice from the I-T department, always keep a track of your spendings and the cashback received. In case the amount exceeds Rs 50,000 in that financial year, you might have to furnish it in your income tax return.
Yes, for those who are not aware, cashbacks could be taxable in certain situations and if you do not
know the rules you might get a notice from the I-T department for under-reporting your income. It may be noted that any monetary benefit received by an individual as either gifts or cashback from a non-relative might be subject to income tax under the 'Income from other sources' category or 'Profits and Gains from business or profession' category.
Section 56(2)(x) of the Income Tax Act states that a tax is levied if any sum of money is received without consideration. This tax is levied only if the aggregate value of such money exceeds Rs 50,000 during the financial year. This means that if you receive a monetary benefit of more than Rs 50,000 in a financial year by way of either credit cards, e-wallets etc, the provision of gift tax can be invoked.
In order to make sure that you are not sent a notice from the I-T department, always keep a track of your spendings and the cashback received. In case the amount exceeds Rs 50,000 in that financial year, you might have to furnish it in your income tax return.
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