Says GST law recognises vouchers as an instrument of consideration (non-monetary form) for future supply
Clearing the air over taxability of gift cards or vouchers, the Tamil Nadu bench of the Appellate Authority for Advance Ruling (AAAR) stated that Goods and Services Tax (GST) would be levied on the underlying goods/ services at the time of redemption such pre-paid instruments.
Modifying the AAR verdict, the AAAR has clarified that GST will be levied not on the supply of vouchers but on the underlying supply of goods/ services at the time of redemption and the time for payment of GST will be dependent on the provisions detailed in the GST law.
In its order, the AAAR said that vouchers are neither goods nor services and the GST law recognises it as an instrument of consideration (non-monetary form) for future supply.
“Since voucher is only an instrument of consideration and not goods or services, the same is not classifiable separately but only the supply associated with the voucher is classifiable according to the nature of the goods or services supplied in exchange of the voucher earlier issued to the customer,” the AAAR said.
EY Tax Partner Abhishek Jain said the taxability of vouchers has always been a grey area, both under the pre- GST and post GST regime.
“This AAAR ruling is welcome and has provided appropriate clarity to the industry on the taxability of vouchers,” Jain added.