With the ITR filing dates coming close, everyone must be busy in collecting the relevant documents and information for filing an ITR. While filing an ITR one should not forget that the cashback offers served via, UPI, e-wallets, credit/debit cards under certain conditions may be taxable.
A person can get cashback immediately or after the transaction is complete. Cashbacks are basically the discounts one gets on purchase. For instance, on the purchase of Rs. 5,000 you get a cashback of Rs. 500. Such discounts are eligible for taxations in case if they exceed Rs. 50,000 in a financial year.
Cashback or discounts exceeding the limits (Rs.50,000) are targeted under section 56(2) of the Income Tax Act. They are treated as gift tax under ‘income from other sources’ or ‘profits from the business’.
Read Also: Step by Step Guide To File Income Tax Return FY 2018-19
To be noted, there are certain exceptions where gift tax is not applicable, such as free pen drives, earphones unless they are purchased for business or generating business. In such cases, taxes can be charged on free commodities under section 28(4) based on the market value of that commodity.
As per the norms of section 147 of the Income Tax Act, a notice of reassessment can be issued if the filer fails to mention such income in ITR.
Will you please tell me the source of this information, as i’m unable to find any circular or notification regarding this