Perquisites Taxation

[Tax Tycoon]

I received 6000 amazon gift card as reward which was included u/s 17(2)(viii) and tax was deducted on entire 6000. I informed payroll team to make 5000 as nil and include remaining as taxable income. They denied to do that also refused to change in Form 16. During ITR I will make 5000 as nil it would trigger an alert right?

[DR.MARIAPPAN GOVINDARAJAN]

While filing return you may indicate the taxable income.  

[Tax Tycoon]

So I can reduce taxable income. Gift card value 6000. E.g if taxable income is 516000 I will change it as 511001 (4999 excluded as per Rule 3(7)(iv)).  

[DR.MARIAPPAN GOVINDARAJAN]

Ok. You have to show the entire income and  to indicate the gift amount as exempted income in the return.

[Tax Tycoon]

Where I need to mention 17(2)(viii) during ITR I mean do we have such provision?

[DR.MARIAPPAN GOVINDARAJAN]

Since in Form 16 it was mentioned as Rs.6000/- you cannot make it as Rs.5000/-.  TDS was recovered for the entire Rs. 6000/-  As per Rule 3(7)(iv) the exemption is up to Rs.5000/-. If the gift exceeds Rs.5000/- the entire amount is liable for taxation and your employer rightly deducted tax at source for the entire amount.  It is my view.

[DR.MARIAPPAN GOVINDARAJAN]

Please ignore my second view. 

[Tax Tycoon]

But beneficial interpretation must be liberal 4999 must be nil anything above must be taxable.

Many sources confirmed the same. I am unable to include screenshots.

AI Summary

Gift Card Reward Sparks Tax Complexity: Professional Seeks Clarity on Exemption Limits and Reporting for Amazon Incentive A tax professional sought advice about an Amazon gift card received as a reward, valued at 6000, with tax deducted on the entire amount. The discussion centered on whether 5000 could be exempted under Rule 3(7)(iv) and how to reflect this in the income tax return. An expert suggested showing the entire income and indicating the gift amount as exempted, while emphasizing that if the gift exceeds 5000, the entire amount becomes taxable.