What is income tax rules for transaction using UPI or online money wallets?

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Hi,

What is income tax rules for transaction using UPI or online money wallets?

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Hi Manjunath,

From my understanding,

The e-wallet transactions will fall under the income from other sources (section 56(2) of the Income Tax). The cashback received through e-wallets will come within the ambit of the term gift, and will be governed by the applicable provisions of the IT Act. Cashback is taxable if the amount exceeds Rs. 50,000 in a financial year (Section 56(2)). When the employer gives any gift voucher above Rs. 5,000 it will be subjected to taxes under Rule 3(7)(iv).

Any undeclared e-wallet transfers may lead to reassessment under the IT Act (S147).

The upper limit for UPI transaction is Rs.1 Lakh and transfer that exceeds this limit will be subjected to tax.

For more information, you can refer to https://www.npci.org.in/.

Hope the above helps.

Regards,
Bhuvana Anand

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