New Delhi: Cumulative cashback for individual taxpayers that are availed through UPI, e-wallets, credit cards, debit cards or apps are likely to be taxable under certain conditions, stated a report. Also Read - AR Rahman Gets Legal Notice From Madras Court in Income Tax Case
Therefore individuals must keep in mind to declare such ‘income’ while filing income tax returns (ITR). If they fail to notify the same, then it calls for a reassessment under Section 147 of the Income Tax Act. Also Read - Income Tax Return Filing Deadline For FY'19 Extended by Two Months | Read Here
Cashbacks are the discounts given to customers against the expenses made. The amount thus received may be immediate or after the completion of the transaction. Such kind of ‘income’ is eligible for taxation. For instance, if an individual receives a cashback of Rs 49 on a transaction amounting to Rs 499, then the amount received will be deposited in the e-wallet or the linked bank account of the customer. Also Read - No Need to Meet Tax Officer in Case of Scrutiny Notice; Use Faceless Assessment: I-T Dept
At the end of a financial year (for individuals), the total cashback must not exceed Rs 50,000. In case the cumulative cashback exceeds Rs 50,000 for individual taxpayers, then it would be subject to gift tax as per Section 56(2) of the Income Tax Act. The amount exceeding Rs 50,000 will be declared under ‘income from other sources’ or ‘profits and gains from business or profession’, stated a report.
Notably, this tax does not apply on freebies in lieu of cashback such as free movie tickets, pen drives or earphones. However, even freebies are taxable under section 28(iv) as per their market value, if they are purchased for business or arise from an individual’s business or profession.
Meanwhile, the Income Tax department has notified I-T return forms for individuals and companies for the assessment year 2019-20. The last date for filing Income Tax Return is July 31 for those who are not required to get their accounts audited.