Clarification on GST Treatment of Vouchers

GST Circular has been issued for Clarification on GST Treatment of Vouchers.

The GST Council proposal on Voucher:

1. Vouchers are not taxable as it is not considered as supply of goods or service
2. Selling Voucher directly (Principal to Principal ) does not attract GST
3. Agent distributing vouchers will pay GST only on their commission
4. Additional services related to vouchers are taxable
5. unused vouchers are not taxable under GST.
6. To remove ambiguity in law, the GST Council recommends removing section 12(4) and 13(4) of CGST Act along with Rule 32(6) of CGST Rules,2017

Clarification:

1. Voucher are not taxed as goods or services under GST. If the voucher is recognised by the RBI like gift card , it is treated as money. If it is not recognised by RBI, it is treated as actionable claim, which is not taxable.GST applies only when voucher is redeemed to buy taxable goods or service.
2. If distributor buy vouchers directly Principla to Principal basis, no GST applies to their sales because vouchers are not goods or service. If agent distribute vouchers for fee , GST applies to the commission or fee they charge. The Main Difference is ownership of the vouchers. Owning the vouchers means no GST, acting as agent means GST Applies on commisssion or fee charged.
3. If you provide extra services like advertising or customer support for voucher issuers, GST will apply to the service fee or chrges receive. This is treated as supply of service and GST must charge.
4. Unredeem vouchers are not taxable because there is no supply of goods or services when voucher is not used.The value of unredeemed voucher is not considered payment for any supply. No GST is payable on the amount attributed to expired or unused vouchers.

Download – Circular No 243/37/2024