Reward Points on Credit Card

This query is : Resolved

Elachi (Querist)
Follow

10 October 2009 Is redemption of Credit card reward points against amount outstanding is taxable under Income Tax ?
Pl. Advise

Thanks

Aditya Maheshwari

Aditya Maheshwari (Expert)
Follow

10 October 2009 Since the amount of reward points will reduce you expenses to that extent and to that point it will be taxable.

CA SANJAY MUKHERJEE

CA SANJAY MUKHERJEE (Expert)
Follow

10 October 2009 Dear Expert,

I can't understand how reduction of expenses by reediming reward points of credit card becomes taxable!!!

Any discount or rebate received only can reduce the cost of purchase/expenses and not itself become taxable.

Would you please be kind enough to add a few more lines and oblige.

Upgrade to CAclubindia Pro. Subscribe Now!

CA. Vinod Pandey

CA. Vinod Pandey (Expert)
Follow

10 October 2009 Dear Mukherjee,

I agree with you but here it would be difficult to categorise the reward point due to some factor. For example, we only come to know about reward point when we get bill/statement for specific period and expenses may be for personal nature as well business expenditure. Therefore, difficulties will arise at the time of reducing particular expenses pertaining to the reward.

Hence, in my opinion it may be treated as other income. Since reward should not be correlated to rebate/discount.

CA SANJAY MUKHERJEE

CA SANJAY MUKHERJEE (Expert)
Follow

10 October 2009 Dear Mr. Pandey,

Thanks for your well-thinked opinion. Let the query be open to get more contribution from our Ld. friends.

Best regards,

Sanjay

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)
Follow

11 October 2009 You should give suggestion to your client that he should have two seperate debit cards or credit cards and he should use one for his business and the other for personal. Now almost all banks give free of cost. He need not be taxed unnecesarily due the fact that we were unable to take the data due to time consuming.