PSA: Points for Good E-Voucher "Section 80G tax exemption"

[Eye of AjayEye of Ajay is verified member.]

Dear All,

I’d like to bring to your attention a critical clarification regarding the Points for Good E-Voucher and its implications for tax exemptions under Section 80G.

After consulting with a Chartered Accountant, it has been confirmed that purchases made using reward points (such as Points for Good E-Vouchers) are NOT eligible for tax exemption under Section 80G of the Income Tax Act.

Why?​

Reward points are not considered "money" in the eyes of tax law. They fall under a different category for taxation purposes. Since points are earned as part of a reward system and not actual income or money, they do not qualify for the same tax treatment.

This means:

• No Section 80G benefits will be applicable for donations or vouchers purchased with reward points.
• Tax exemptions are valid for certain donations made directly to eligible institutions.

Takeaway​

If your primary intent is to gain tax benefits under Section 80G, it’s important to make donations directly to eligible institution than using reward points. While initiatives like Points for Good are commendable for enabling meaningful contributions, they do not provide the same tax advantages.

Please make informed decisions and consult your financial advisor for further clarity. Also this post is exclusively for points redemption I have no idea about if you buy the E-Voucher from woohoo, amazon, etc using cards, UPI, etc.

 

[helloworld]

After consulting with a Chartered Accountant, it has been confirmed that purchases made using reward points (such as Points for Good E-Vouchers) are NOT eligible for tax exemption under Section 80G of the Income Tax Act.

Why?​

Reward points are not considered "money" in the eyes of tax law. They fall under a different category for taxation purposes. Since points are earned as part of a reward system and not actual income or money, they do not qualify for the same tax treatment.

This means:

• No Section 80G benefits will be applicable for donations or vouchers purchased with reward points.
• Tax exemptions are valid for certain donations made directly to eligible institutions.

Since you're a banker, and consulted with CA. Could you clarify below point..



Here, it says if I earned 50k as cashback then I have to pay tax because tax law considers this as "actual money" in their eyes.

Why can't be the same when redeeming points?

 

[Eye of AjayEye of Ajay is verified member.]

Since you're a banker, and consulted with CA. Could you clarify below point..

View attachment 75631

Here, it says if I earned 50k as cashback then I have to pay tax because tax law considers this as "actual money" in their eyes.

Why can't be the same when redeeming points?

Because cashback is not the same as points whose value changes with the change in banks. It is upto the banks to assign the value to these points and this is seen as an in-house promotion. Where as cashback comes in terms of monetary gains when it gets deposited to your card, a/c, etc you can use this cashback at the same value as cash hence the tax.

If you were to buy a Good E-Voucher with this cashback you would get Section 80G tax exemption for sure since the cashback is considered as real monetary gains. BTW points to cash is also treated this way since you are shifting from banks in-house system to outside.