As the deadline to file income tax return for the FY 2018-19 draws closer with July 31, 2019 being the last date, here we provide you information on the taxation aspect of some of the other non-salary receipts which have on a more recent basis become a part and parcel of our life such as money received in your e-wallet account from a friend, cashbacks from e-shopping sites or on credit card and gift vouchers.
So, here we will understand the tax implications on each of these sources of funds one by one:
1. Money received in your e-wallet: There could be 'n' number of reasons for receiving money in your e-wallet because of the ease it provides through convenient payment transfer option via the phone and any such receipt as per the income tax rules will be treated as gifts and further gift of value up to Rs. 50,000 is exempt from gift tax. Nonetheless, if the value of transaction i.e. transferred between friends or otherwise exceeds Rs. 50,000, the entire amount will come under the tax net.
Further, in case the receipts in your e-wallet are in lieu of the debts owed to you, you are not liable to pay taxes on them. And in a situation when the department of income tax scrutinizes your account, you may take a note in writing from your debtors saying that the amount received was against a debt settlement.
2. Cashback rewards: Cashback rewards are now a promotional tool for many services and these are earned for transactions undertaken on e-commerce sites, online payment apps or via usage of credit card. And the amount received as cashback gets credited either to individual's bank account linked to the payment mode, wallet or the credit card. So, whether or not this cashback amounts to be income for you and do you need to show it while filing taxes?
Under section 56(2) of the Income tax Act, an aggregate amount of over Rs. 50,000 received by an individual taxpayer without consideration in a particular financial year results in implication of gift tax in the hands of the receiver. This income has to be shown under the head 'income from other sources'. And if the amount received as cashback or other monetary gifts is less than Rs. 50,000 in a financial year, there arises no taxation liability on it.
3. Gift vouchers that are received as either gifts or rewards: Here in the taxation aspect is based on the premise that what relationship you have with the person giving you the gift voucher. In a case, when you receive the gift voucher from your employer and it exceeds Rs. 5000 in value, the entire amount will be subject to tax as per income tax rule (7)(iv).
For gifts received from a person's relatives including spouse, children, siblings or any of the lineal ascendant or descendant of the individual or the individual's spouse, there arises no tax implication on such gifts in the hands of the reciever. However, gift vouchers received from friends and family exceeding Rs 50,000 in value in a financial year are subject to tax and have to be mentioned in 'income from other sources' head.