Clearing the air over taxability of reward playing cards or vouchers, the Tamil Nadu bench of the AAAR has dominated that GST can be levied on the underlying items/ companies on the time of redemption such pre-paid devices.
Kalyan Jewellers India Ltd has approached the Appellate Authority for Advance Ruling (AAAR) towards the ruling by the Tamil Nadu state Authority for Advance Ruling (AAR), which had stated that GST at 12 per cent or 18 per cent can be levied relying on whether or not on such pre-paid devices was paper primarily based or magnetic strip primarily based respectively.
Modifying the AAR verdict, the AAAR has clarified that GST shall be levied not on the provision of vouchers however on the underlying provide of products/ companies on the time of redemption and the time for fee of GST shall be depending on the provisions detailed within the GST regulation.
In its order, the AAAR stated that vouchers are neither items nor companies and the GST regulation recognises it as an instrument of consideration (non-monetary kind) for future provide.
“… since voucher is barely an instrument of consideration and never items or companies, the identical is just not classifiable individually however solely the provision related to the voucher is classifiable in response to the character of the products or companies provided in alternate of the voucher earlier issued to the shopper,” the AAAR stated.
EY Tax Associate Abhishek Jain stated the taxability of vouchers has all the time been a gray space, each underneath the pre- GST and submit GST regime.
“This AAAR ruling is welcome and has supplied acceptable readability to the trade on the taxability of vouchers,” Jain added.