- The Indian government is considering providing relief on the levy of GST on vouchers and gift cards.
- Some vouchers currently have GST levied on them at the time of purchase, leading to double taxation when they are used to buy goods or services.
- The proposed clarification is expected to state that vouchers and gift cards should not be taxed at the point of sale.
- The clarification will also address the taxation of vouchers that are tradeable or sold to distributors or dealers.
- The GST Council will make the final decision on the clarification, with its law committee currently examining the issue.
- The confusion on the taxability of vouchers followed a 2021 ruling that held vouchers were goods and taxable, but this ruling was subsequently turned down by the high court.
- The industry has raised concerns about the levy of tax on vouchers, as it could impact the use of this promotional tool.
- A detailed clarification is needed to avoid unwarranted two-way taxation involving payment through vouchers.
- The GST Council needs to clarify that vouchers are actionable claims and trading in vouchers does not incur GST liability.
- Breakage income, which refers to the value of unredeemed vouchers, is not liable to GST.
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.
