- Categories of Vouchers: The Central Board of Indirect Taxes and Customs (CBIC) clarified that vouchers fall into two categories: prepaid instruments (like gift cards and digital wallets) treated as ‘money’ under GST, and non-prepaid vouchers, which are classified as ‘actionable claims.’ Neither category is considered a supply of goods or services for GST purposes.
- Distribution Models and GST Application: The CBIC outlined two distribution models: (1) Principal-to-principal, where distributors buy vouchers at a discount and sell them without GST liability, and (2) Commission/fee basis, where distributors earn commissions that are subject to GST as they provide a service.
- Unused Vouchers and Additional Services: Unused vouchers, or “breakage,” are not taxable under GST as they do not represent a supply of goods or services. However, any fees charged for additional services related to vouchers, such as marketing or customer support, are subject to GST, providing clarity and reducing potential litigation for businesses in the industry.
Source A2ztaxcorp
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