Cashback in E-wallets- Taxable Under Income Tax?

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Amazon, Paytm, Oyo Hotels, Ola, Groffers, Zomatto  and every other E-commerce operators are provding you cashback. We all are hunting for maximum cashback. Price competition among e-commerce operator is shifted to Cashback offers.We all must have claimed cashback like 10%, 5%, 20% cashback at least once for sure. Now a question rises, Kya Yeh Cashback bhi Taxable hai? Read the entire story Whether Cashback on E-wallets are taxable?

Factors to determine if Cashback is Taxable or not?
  • Purpose of Availing Services or Goods- Either for Business/ Profession or Personal Use.
  • Type of Cashback- 1.Instant Discount  2.Deferred Cash backs 
  • Type of Expenditure Incurred - Whether Capital Expenditure or Revenue Expenditure.
What is Instant Discount- Cashback?
  • An extra discount is offered by website which in instantly deducted from the listed price.
  • That extra discount is offered for using specific Debit Card & Credit Card.
  • For Example:- Price of a mobile phone is listed at Rs.10,000/-. However you will get 10% Cashback if you pay using HDFC Bank Credit Card. Here, your 10% of Rs.10,000/- i.e Rs.1,000 is your instant discount cashback.
What is Deferred Cashback?
  • In this scheme, customer pays the entire amount at once and the banks/E-commerce operators credit the predetermined amount in user's account.
  • Sometimes user get cashback on Creating a new account, on sharing referral codes.
 Taxability of Cashback if Customer is using it for Business/Profession:-

1. In case of Instant Discount:-
    • The Net Price (List Price minus Instant Discount) shall be allowable as business expense.
    • If it a Capital Asset like Laptop, A.C, Computer then the depreciation will be allowed on the net amount only. 
2. In case of Deferred Cashback-
    • Claim gross amount paid as Business Expenditure.
    • If it is a Capital asset then one can claim depreciation on gross amount paid.
    • Now add your Cashback as an income under Other Business Receipt.
    • You have to add it in your income even if the cashback is of One Rupee.

 Taxability of Cashback if Customer is using it for Personal Use:-

1. In case of Instant Discount:-
    • Nothing shall be chargeable to tax.
    • This is just like a cash discount and hence no income no tax :).
2. In case of Deferred Cashback- 
    • If the total amount of cashback exceeds Rs.50,000 during a financial year, the same shall be taxable under the income from other sources.
    • It means if your aggregate cash back is upto Rs.50,000/- then it not taxable.
    • Amount of Rs.50,000/- is to check on cummultive basis which means aggregate of total Cashback received during entire year is to be considered.
    • For Example:- You brought a Laptop of Rs.2,00,000 and received cash back of Rs.25,000 in the month of july, further You received Rs.5000/- as cashback on Ola rides in the month of November, in december you brought an Iphone for Rs1,25,000 and received cashback of Rs.21,000. Here you received Rs.51,000 in total as cashback (25000+5000+21000) which is exceeding Rs.50,000 and therefore entire Rs.51,000 is taxable under the Income from Other Sources.
    • If the amount of Cashback is less than Rs.50,000 but if you have received in addition to this cashback some monetary gifts from friends or non-relatives and aggregate of Cashback and Monetary Gift is exceeding 50,000 in combination of both then also aggregate amount will be taxable under Income from other sources.
    • For Example:- You received a cashback of Rs.10,000 and cash gift of Rs.45,000 from a friend. Here although your cash back is less than 50,000 but your total cash gift in combination is exceeding 50,000 and therefore entire Rs.55,000 is taxable under Income from Other sources.
That's all about taxation of Cashback.
!! I hope it was helpful !!

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Post a Comment

  1. Thank you for the wonderful information.... :)

  2. What if I am getting a deferred cashback of say Rs. 51k, when the cashback was received because the whole of the expenditure was incurred for personal purposes.

  3. Great job!! Keep updating like this.

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