People get some rewards (Credit Card Rewards) when making credit-debit card payments. Through these, people sometimes manage to earn up to a few thousand rupees, but a US physicist earned up to Rs 2 crore 17 lakh using his sharp mind. He juggled credit cards, money orders and gift cards to generate proceeds.
Hobby turned into profession
According to the Wall Street Journal report, Konstantin Anikeev, who is a physicist, was interested in earning from credit cards for a long time. He had been doing so since 2009 and gradually he turned his hobby into a profession and started earning millions.
According to the report, Konstantin started buying a large number of gift cards from his credit card. He would first buy a gift card and then encash it. He would then deposit this money back into his bank account and then pay the credit card bill. The rewards he received during this time would be his earnings.
Made profits on every purchase
For instance, he would get US $25 as a reward on the purchase of a US $500 gift card on the basis of 5 per cent. To encash the gift card, he would pay US $6. He would then be left with US $19, which would be his profit.
According to the report, Anikeev earned $300,000 (about Rs 217 million). Meanwhile, seeing his income increase, someone reported this to the US Tax Department. The department sent him notices over disproportionate assets after an investigation.
After that, the matter reached the court. There, Anikeev uniquely defended his case, who had arrived at the court with gift cards in a tub. he said these were not his earnings instead the discounts and rewards given to him by the credit card companies.
After hearing the arguments of both the parties, the court said that gift cards are like property and rewards (Credit Card Rewards) received on the purchase will not be taxed. According to the judge, rewards were discounted in the case. But if the gift card is converted back into cash, he has to resell your property for profit. In that case, it will be taxed.
Order to pay income tax
The judge ruled that they would have to pay income tax on this income. After the court’s decision, the income tax department is now working on an account to collect tax from Anikeev.