Cashbacks are discounts given against expenses made. These can either be immediate or deferred for after the transaction has been completed. These can be online (UPI, e-wallets, credit/debit cards or apps) or offline. The amount thus received could be eligible for taxation as follows: For example, on a transaction of Rs 1599, you receive cashback of Rs 50, which is deposited into the e-wallet or linked bank account. The sum of all such cashback in a financial year (for individuals) must not exceed Rs 50,000.
This is so because as per Section 56(2) of the Income Tax Act, an amount exceeding Rs 50,000 for individual taxpayers would be subject to gift tax and declared under ‘Income from other sources’ or ‘Profits and gains from business or profession’. However freebies are taxable under ‘Profits and gains from business or profession’ on their market value, so same is not treated as cashback.