NOVEMBER 09, 2020

By K Srinivasan

HAS anyone faced problems of Taxability of Coupons/Gift cards/Vouchers given by bankers to company or by the Employer to its staff and so on?

Currently they are not charging GST.

Is it because they are in nature of vouchers and time of supply arises only when the gift card is redeemed by employees of the company? Or is there any other reason?

Is there any exemption in the exemption list of services? Will this situation fall under it?

Let us try to answer these questions one by one, last one first because it contains the answers to the rest as well and also have a look at the GST provisions governing them.

Is it a supply in the first place, to call it exempted?

On redemption, the Redeemer will raise a bill for his commission and issuer will account it as a supply to the Redeemer and pay and collect tax, respectively.

It not being a supply in the first place, why ask if it is exempted, is the answer to which we are naturally led into.

Trading of voucher against which supplies are not identifiable.

Clause (b) of sec 12(4) of the Act says that in such cases time of supply is the date of redemption. Therefore, the time of supply is not yet come, hence you are not authorised to tax the sale of voucher.

And yes, if the supply is not yet identified, then Time of Supply will be only on the identification of the supply. And tax charged at the time of supply and consequently not liable to any output GST at the time of its issue when supply remains unidentified.

Why some suppliers mention it as exempt supplies in the invoice then, is the question asked by many.

Something wrong with these persons' understanding of the point of taxability possibly, is one answer. It is unaided by a clear-cut instruction by the Department is another, I guess.

There are coupon suppliers also doing it without charging GST. It's basically not a supply. Some seem to know while others are unawares, is the real position of taxpayers as of now.

Typically in this voucher business, sales are pushed by giving away these vouchers, but then many do not even turn up to redeem the same and hence ultimately they remain a mere piece of paper like a Cheque leaf, left around without being cashed.

These Coupons/Gift cards/ Vouchers until they remain unredeemed, don't amount to a taxable supply.

Time of supply in the case of single purpose voucher i.e. case where supply is identifiable at the time of issuance of voucher is the date of issue of voucher.

However, in all other cases of supply of vouchers, the time of supply is the date of redemption of voucher.

Way forward

The Government would have done well to have explained it in so many words instead of leaving it to interpretations and conjectures that sometimes leads to avoidable litigation.

Somehow, the sale of Vouchers has come to remain a tale of missing tail in the statute book of GST, as per the Author.

[The Author is a former Assistant Commissioner of GST, Chennai and a CBIC Master Trainer, GST and currently a Senior Associate, Indirect & Corporate Taxes, at a Chennai-based Law Firm, RANK Associates. The views of the Author are purely personal.]