Enjoying cash backs on payments apps, online deals, card payments? Beware! You may get a tax notice

Enjoying cash backs on payments apps, online deals, card payments? Beware! You may get a tax notice

You may get tempted by big discounts and cash backs offered on products during the Big Billion Days and Great Indian Sale by Flipkart and Amazon, respectively, and go on shopping spree to reap the benefits. You may also opt to pay through selective credit cards or payments apps like Paytm, Google Pay ‘Tez’, PhonePe etc to get additional cash backs on bill payments, etc.

Although there is no reason to opt out of such sales and deals and lose the benefits, but you should keep track of how much cash backs you are getting during a financial year. If you are thinking why, then keep it in mind that the Income Tax Department is getting all the information and if you fail to keep track of the cash backs you got, the I-T Department may take the pain to remind you through a Tax Notice once the total cash backs in a financial year crosses Rs 50,000.

While there is no problem if you get instant discounts, but cash backs, availed during the purchase of goods or services for personal use, may be treated as income from other sources, under section 56 of the Income Tax Act. According to section 56, “If any sum is received without consideration in excess of Rs 50,000 during the previous year, the whole amount shall be chargeable to tax.”

Not only cash backs, any item you receive without consideration or as gifts from unrelated persons, like friends, on an occasion, which is not exempted under section 56(2)(vii) of the Income Tax Act, like marriage etc, will be added to the amounts of cash backs to arrive at the figure of Rs 50,000 under the head ‘income from other sources’.

So, whenever you get cash back on a deal or on a payment through an app or card, you should note it down, so that you may mention the total cash backs received in a financial under the head ‘income from other sources’ while filing your income tax return (ITR), once the figure crosses the Rs 50,000 mark, without waiting for the notice from the Income Tax Department.

 

Source:- financialexpress

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