Customer Reward points

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Ankita (Querist)
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23 May 2011 A company (XYZ) purchases electronic items from Company ABC for the purpose of resale. On purchase of items worth certain predetermined amount, Company XYZ receives reward points for the same from Company ABC. These reward points can be redeemed from a third party (Company DEF). What will be the tax implications for the same for ABC,DEF and XYZ.
Can I know the relevant section or case laws for the same.

Thank You,
Ankita

CA MANOJ GUPTA

CA MANOJ GUPTA (Expert)
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23 May 2011 THIS WILL BE TREATED AS BENEFIT OR PERQUISITE ARISING OUT OF BUSINESS AND WILL BE TAXED AS BUSINESS INCOME UNDER SECTION 28(IV)

CA MANOJ GUPTA
JODHPUR
09828510543

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Ankita

Ankita (Querist)
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24 May 2011 Thank you sir.
I also wanted to know, if suppose as per IFRIC 13, out of Rs. 100 sales consideration, ABC treats Rs. 90 as current sales component and Rs. 10 is treated as deffered revenue (of reward points).
Income for the purpose of PGBP is Rs. 100 or Rs 90.

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