Tax on Redemption of Reward Points

[face=Geneva][size=9][size=14]Hi Everyone,

Have some doubts, request you to please help.

1.     Credit cards offer reward points to customers on their spending.

2.     For example, One Bank's credit card offers a scheme wherein for every transaction of Rs 200, you get one reward point. Once you have accumulated 500 points (which further means spending Rs 100,000), you may get fuel vouchers or gift/sports articles.

3.     Assuming, that the Credit Card company gets 2% of the amount spent, the earnings to the credit card company would be Rs. 2,000 for rewards shredded out of Rs. 200, which means a spending of 10% by the credit card company. However the End-user (Credit Card Holder) gets 0.2% as rewards on his spends.

Similarly, if any company comes out with the reward points on purchases made, which are redeemable for limited articles / packages (the value of which may be much higher than the purchases made), will the same attract TDS / FBT provisions?

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