Traders of e-vouchers to pay 18% GST: AAR
Karnataka-based Authority for Advance Rulings (AAR) has tried to sort out a tricky issue of levying goods and services tax (GST) on the supply of evouchers by sales promotion firms to other companies.
It ruled that sales promotion companies, which trade in vouchers, will have to pay GST at the rate of 18 per cent and mention it on its monthly or quarterly sales returns.
The ruling was given on a petition by a company which is engaged in the business of providing marketing services.
As part of the offered services, the applicant also deals in supply of evouchers. He sources e-vouchers for other companies. The purchasers of these vouchers will issue them to their clients, who will, in turn, encash them on purchase of goods or services.
The authority ruled that e-vouchers are not an actionable claim, hence, are not exempt from GST. This is so because the entitlement of redemption is transferred or delivered to the purchaser at the time of supply of vouchers.
Further, e-vouchers are taxable at the rate of 18 per cent GST as these would come under the residual category, the authority ruled.
The AAR also held that since the applicant is not aware of the date of redemption of the vouchers, the time of supply would be the date of filing of periodical sales return which could be quarterly or monthly. Companies, with an annual turnover of up to ~1.5 crore, are exempt from filing monthly returns.
“Taxability of vouchers is always a tricky issue as it involves multiple parties, intangible nature of goods and whether the same qualifies as ‘consideration’ or ‘money’,” said Harpreet Singh, partner, indirect tax, at KPMG in India.
In this case, the applicant was involved in trading of vouchers, and hence, the authority clearly mentioned that the activity amounts to supply, added Singh.
There was also an issue whether evouchers are to be classified as goods or services. The AAR placed reliance on the Supreme Court judgment in the case of Tata Consultancy Services Vs State of Andhra Pradesh in 2004. It held that a voucher is capable of abstraction, consumption and use and it can be transmitted, transferred, delivered, stored and possessed, among others. So, it would get covered under the ambit of goods, though it is intangible.