New Delhi: India’s digital journey has seen a major boost with the rise of UPI. It has made transferring of money simpler than ever. Whether it’s splitting a bill, paying for groceries, or transferring funds to family, UPI allows users to complete transactions in seconds using just a smartphone. It eliminates the need for cash or cards, offers secure and traceable payments and comes with zero hidden charges.
UPI transactions are also monitored by the Income Tax Department just like other forms of income. If you receive gifts via UPI from someone who is not a relative and the total amount exceeds Rs 50,000 in a financial year it will be considered as “Income from Other Sources” and taxed accordingly. However, gifts from relatives—no matter the amount—are completely tax-free.
If your employer sends you gifts or vouchers through UPI worth more than Rs 5,000 in a year, that amount will be added to your salary and taxed as per your income slab. Even cashback received through UPI can be taxable if the total cashback crosses Rs 50,000 in a year.
Businesses should note that any rewards or incentives received through UPI are counted as income and are taxable. Also, large UPI transactions over Rs 1 lakh may draw scrutiny and could be taxed if they’re considered income. However, payments made for IPOs, insurance premiums, or taxes have a higher exemption limit of up to Rs 5 lakh.
UPI funds received as loan repayments or reimbursements are not taxable, but if you earn interest on a loan you’ve given to someone, that interest is considered taxable income.
One of the biggest advantages of using UPI is that it doesn’t come with any extra fees. You can send or receive money without worrying about hidden charges. All you need is a UPI ID or a PIN to get started, which makes transactions quick and easy—no need to enter your details every time you pay.
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