Is Cashback Taxable?

Nov 06, 2018 By Admin

Every Festive Season comes with various discount offers, these days there’s Cashback offer to lure people to go shopping. People usually get confused over the Cash back Offer, how does it work for the customers and for those who are offering such offers, usually the banks.

So what’s Cashback Offer?
A Cashback reward program is an incentive program operated by various online shopping websites, credit card companies, and e-wallet companies to Offer lucrative cash back schemes.

In this scheme the payment merchant or card issuer operates such a program in which the card holders typically receive anything in between 0.5% and 10% of their net expenditure as cashback or rebate, which is either credited to the account or paid to the card holder separately.

Is Cashback Taxable?
Now another question arises, is Cashback Taxable?

In our opinion, in B2C Transactions Cashback is a form of discount given to the end user for the purchase of commodity to be utilized for his personal use and hence; Cashback is not taxable under the applicable provision of IT Act, 1961.

However, in case of B2B Transactions; since the said Cashback/Discount is to be netted off from the purchase price of goods, so the purchase amount shall be lesser to the said extent and ultimately profit shall be higher to the extent of cashback so given. Therefore, in case of B2B Transaction, Cashback is taxable.

Published by : RAKESH KANWAR & CO.
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