The Central Board of Indirect Taxes and Customs (CBIC) has clarified the GST treatment of transactions involving vouchers. Key points include:
- Voucher Classification:
- Prepaid Vouchers: Includes gift cards and digital wallets recognized by the RBI, treated as “money” under GST, and not classified as a supply of goods or services.
- Non-Prepaid Vouchers: Considered “actionable claims” and similarly not treated as a supply of goods or services for GST purposes.
- Voucher Transactions:
- Regardless of type, transactions involving vouchers are not taxable under GST. However, the goods or services redeemed using the vouchers may still attract GST.
- Voucher Distribution Models:
- Principal-to-Principal: Distributors purchase vouchers at discounted rates and sell them, earning a profit. These transactions are not subject to GST.
- Commission/Fee Basis: Distributors act as agents, earning commissions or fees, which are taxable as a supply of services under GST.
- Additional Services and Unused Vouchers:
- Services like marketing, co-branding, or customer support provided to voucher issuers are subject to GST.
- Unredeemed vouchers (breakage) are not taxable, as they do not represent a supply of goods or services.
The clarification aims to provide certainty and reduce litigation, ensuring that GST is not applied to voucher transactions themselves but only to related services. It also highlights the potential for businesses to explore refunds for GST previously paid on unredeemed vouchers.
Source: a2ztaxcorp.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
