Pay Income tax on Cashbacks earned through Paytm or other Wallets and schemes
by Agam Gupta 7.2K
Yes! You read it right. Whatever paybacks/cashbacks you have earned through online schemes, are all chargeable to income tax under section 56. This could come as a surprise to you and you may assume that it is a new law, but let me tell you it is not. Anyways, let us discuss some of the important points of this article in detail;
Meaning of Cashback?
Suppose you pay your electricity bill through any mobile wallet and you get some money back in return. So, that returned money is the Cashback that you have earned. So, all Cashback earned through these schemes should be totaled and offer to taxation while filing an income tax return.
Does Instant discounts also included?
If you go to Zara and does a shopping of Rs.5000 and they offer you 10% or quantity discount, then that does not come under the preview of cash back and hence, non-taxable.
Does free gifts also included?
Sometimes, when you shop for Rs.9,999/- the companies tend to give you free gifts. Those free gifts are also not covered under the preview of section 56 except for gold or any precious stones, metals etc.
Explanation of complete law related to treatment of Cashback as Income
First of all, it is not a new law or ordinance that has been passed by parliament. As per the section 56 of the income tax act, any person who receives any amount of money which amounts to more than Rs.50, 000/- shall be taxable as income tax in the hands of the assessee.
Here are the following example which will let you understand it properly;
- A total Cashback earned from all websites or schemes is above Rs.50,000/-, then it shall be taxable.
- A total Cashback earned from all sources is less than Rs.50,000 then it is not taxable.
- Suppose, your friend gifted you Rs.30,000 during the financial year and total Cashback earned is Rs.25,000, then cumulatively it crosses the threshold limit and therefore, it shall be taxable as income tax.
How do income tax get to know about my Cashback?
Never risk of stealing your incomes from the eyes of tax departments. Trust me! They have your data and what is your record, it is on their record too.
Conclusion
Get ready to pay more tax or plan your tax in a better way by filing your income tax return through our experts.