1

I paid for dinner with 3 of my friends.

And at the end of the day, these 3 people send me Rs.500 each. They sent me the money via UPI bank transfer (say, using phonePe or BHIM).

Will this amount (Rs. 1500) be taxed?

2

No, this amount is not taxable. For it to be taxable it should be more than ₹ 50,000 in a financial year.

Even then if you can establish that the transfer of funds was not a gift and more of convenience, there is no tax applicable.

  • More than ₹ 50,000 in one transaction? Or is it like the sum of amounts that I receive from my friends in a financial year should be less than ₹ 50,000 to avoid tax? – Abhijith Asokan Sep 29 '18 at 9:25
  • 1
    Sum of all in one financial year – Dheer Sep 29 '18 at 12:03
  • Is the 1500 and the 50000 the same unit of money? i.e. 30 such lunches and he’d be close? Or is there a decimal point like the 1500 was more like $15, vs $50K? – JoeTaxpayer Sep 29 '18 at 12:55
  • How can I prove that this is for convenience? What is the procedure for it? – Abhijith Asokan Sep 29 '18 at 14:55
3

In addition to the reasons provided by Dheer, the amount is not taxable for other reasons.

Most importantly the payment is not income to you. It's payment to a restaurant for a dinner, a payment that happens to have been paid through you. You might consider yourself the (unpaid) agent handling the transaction for him, or you might consider it a very short term interest free loan. Neither are going to attract tax.

Secondly the tax office is not interested in amounts as low as a single dinner. That's not a legal reason but a very practical reason. If it was a larger amount the tax office might require you to document the transaction and explain why you were processing it for your friend. But for an amount as low as a dinner they are simply not going to care.

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