The decision will levy a tax of 18 per cent on all e-vouchers, whether or not they are identifiable on issuance of such vouchers.
The Authority for Advance Ruling (AAR) has said that gift vouchers, cash-back vouchers given to customers or suppliers, are treated as goods and will attract 18 per cent GST.
Bengaluru-based Premier Sales Promotion Pvt Ltd approached the Karnataka bench of AAR on the GST rate that would be applicable on supply of gift vouchers, cash-back vouchers, or e-vouchers with multiple options. The applicant is involved in trading vouchers for the course of or furtherance of business.
In respect of gift vouchers, the AAR notes that the applicant purchases the said vouchers and sells the same to his customers, who in turn distribute them to his customers/customers and the customer can use them to pay for the consideration for the goods or services purchased. to discharge its obligations. by them from their suppliers. Therefore, the said gift vouchers will not receive the nature of money at the time of their supply to the applicant.
For cash-back vouchers and multiple option e-vouchers, the AAR observed that the said vouchers may not be covered under the definition of “money” at the time of supply, but will be of money color only when payment of consideration for the supply will be used for. of goods or services received by the end user.
Passing the judgment, the AAR said that supply of vouchers is taxable as goods and will attract 18 per cent Goods and Services Tax.
AMRG & Associates Senior Partner Rajat Mohan said that the AAR has considered that the supply of e-vouchers is taxable as goods at 18 per cent, even if the underlying commodity is purchased using such vouchers. The judgment also struck down the special provisions mentioned in the GST rules relating to the timing of vouchers relating to supplies.
“This decision will impose a tax of 18 per cent on all e-vouchers, whether or not such vouchers are identifiable on issuance.
“This will lead to accumulation of tax credits for companies using e-vouchers and supply of products such as jewellery, household necessities such as edible oil, sugar, spices, tea and coffee, processed food, laptops/computers and life saving medicines. The supplies will be listed for a lower rate of taxes,” Mohan said.
EY Tax Partner Abhishek Jain said that most of the industry players are not treating vouchers as goods and paying final supplies based on GST against which such vouchers are used.
“However, this judgment says that vouchers come under consignment and levy tax on supply of vouchers at 18 per cent GST (residual entry). This decision will create uncertainty in the industry and lead to litigation.
“The government should come up with comprehensive guidelines with regard to taxability of vouchers to avoid consistent practices and litigation,” Jain said.
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