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Received money from friend via a payment app. Is that taxable?

Payment wallets and apps have made our lives so much easier. It is now easy to split the bill with friends when you have dinner. You can easily split the expenses if you are out shopping together. It is easy to make payments to friends and settle debts with a few clicks. UPI payments and mobile wallets have made it so easy and convenient to transact on a daily basis. However, what about the taxability of such receipts?

Logically, these receipts are non-salary in nature. So the payments you receive from a friend or the cashback rewards you get from the app are to be included separately in the process of filing for income tax.

Let us discuss in detail how you should treat such incomes in your income tax assessment.

Going Dutch with your friends?

If we go back to the example of a dinner that a bunch of friends have together, let us say you paid the bill at the restaurant and the rest of your friends just paid their share to you via a mobile wallet or UPI payment. The bill is all settled now, but you did receive money from your friends.

It seems like a tricky situation, trying to understand if this would be treated as an income. If these are treated as sources of income than they would also need to be declared in your returns.

The answer is simpler than that. Usually, if a friend has paid you through a payment app or wallet or a UPI payment transaction, such receipts are to be treated as gifts. The rule for gifts under the Income Tax law is that gifts of up to a sum of ₹ 50,000 are exempt from income tax. As long as the amount transferred to you doesn’t go over this threshold, there is no need to declare it. However, if you have transferred bigger amounts between friends, the entire amount is liable to taxation.

Let us study the specific case of the restaurant bill being split and paid to you via a payment app. This amount transferred to you is actually in the nature of a debt settlement - it is just money that they owed to you. In this case, you do not need to pay taxes on this amount. That being said, if your accounts are scrutinized further by the Income Tax Department, you may be asked to furnish proof of this debt settlement - a written note from your debtors, i.e your friends should suffice for this purpose.


If you receive money from your friends via a payment app, it is a prudent move to check if it is liable to taxation. It will help you file your income tax returns without any loopholes.

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