Latest Income tax rules introduced on E-Wallet or UPI Transactions

Finance

Transaction via e-wallets and UPI transactions have increased manifold especially during the last couple of months. In the current times when there are restrictions in respect of withdrawal from same bank ATM, cash transaction limit, withdrawal charges etc, people prefer to go cashless and use digital wallet or UPI transfers.

There are some implications of these e-wallet or UPI transactions that you need to know. As per income tax rules, reporting of salary income, income from other sources, capital gains, etc. is mandatory in the income tax return (ITR) filing. Likewise, funds received via UPI or e-wallets are also required to be put forth while tax filing.

UPI and e-wallets also attract tax. Funds transacted through these modes also are taxable under the Income Tax rules. e-wallets let you earn cashback rewards which is also one of the reasons why people prefer using wallets from transactions over cash. Any cashback received directly gets transferred to your bank account. This cashback is taxable if the amount is above Rs 50,000 in a financial year, under Section 56(2) of the Income Tax Act.

A Unified Payments Interface or UPI lets you do real-time money transfer, it is accessible anytime, enables payment/collection of money, free of cost and stores multiple bank accounts. Just as income from sources like Fixed Deposit (FD) or Mutual Funds are taxable; similarly, there is also Income Tax on UPI transactions.

The maximum limit for transferring money is Rs 1 lakh. But, if the transfer exceeds the said limit, the amount is subject to tax. In case the employers gives a gift voucher of over Rs 5,000 through UPI, then there is tax levied on it as per Income tax rule 3(7) (iv). Also, other vouchers received from family or friends in a financial year worth over Rs 50,000 are also taxable income from other sources.

Even if you think that money received from UPI may not get traced, remember that the Income Tax Department of India traces every transaction, since it is done electronically. If you’re not aware of this, you need to know such funds are also taxable under the Income Tax rules so as to avoid any trouble later.

 

 

 

 

Source: timesnownews

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