Classification of nature of business in gst

This query is : Resolved

CA jignesh daiya (Querist)
Follow

15 April 2019 Respected sir

we have started business of app the features of same are as under:-
we are in the business of promoting goods and service by distributing coupons , promoting the goods & services through discount card programs .
Revenue for our business are as under:-
first of all registration will be done for business man as well as customer they can used our app as follow:-
THIS DISCOUNT COUPON ARE USED FOR PURCHASING VARIOUS THING ON WHICH BUSINESSMAN OFFER DISCOUNT THROUGH OUR APPLICATION WE ARE NOT RELATED WITH BUSINESS OF BUSINESSMAN

Revenue for our app will be as under :-

issue :- RS.1
redeem :-Rs.25

For new business 30 days free offer for issue as well as redeem

when any customer redeem any coupon , loyalty bonus of 20 points = Rs.20 Will be credited to customer account
when any customer have balance of 500 points , they can make the payment by 500 points only for purchase of item worth Rs.500 & no cash required
that 500 points will be credited to businessman in form of Freedeem cash A/c with 5% extra for ex. iff customer redeem 500 points , businessman will get 525 freedeem cash
that can be used by buinsessman in two forms :-

1) they can topup their prepaid account
2) they can ask for payment from us within 7 days we will make the payments

If businessman make installation of Freedeem App to new customer wallat balance of rs.20 will automatically increase of that businessman
If any custommer refer freedeem app to other new customer 10 royalty points will be credited to his account

I want to know how accounting will be done for all above transaction ?
what will be nature of business of our app considered for gst purpose?
all amount showan above are inclusive of gst then how gst would be calculated and what percentage will be gst for all above transaction?
please guide on the same IT IS URGENT
ANY TDS LIABILITY WILL ARISE FOR THE SAME PLEASE GUIDE

thanks & regards
CA jignesh daiya

CA jignesh daiya

CA jignesh daiya (Querist)
Follow

07 May 2019 please reply
thanks in advance

CA jignesh daiya

CA jignesh daiya (Querist)
Follow

16 May 2019 no reply till now
please reply
i except quick reply in this regards

Upgrade to CAclubindia Pro. Subscribe Now!

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
Follow

06 July 2024 Based on the description of your business activities, here's a breakdown of how accounting, GST, and potential TDS considerations could apply:

### Accounting Treatment:
1. **Revenue Recognition**:
- **Issue of Coupons**: Recognize revenue of Rs. 1 at the time of coupon issuance.
- **Redemption of Coupons**: Recognize revenue of Rs. 25 at the time of coupon redemption.
- **Loyalty Bonus**: When a customer redeems a coupon, credit Rs. 20 as a loyalty bonus to the customer's account.

2. **Points System**:
- Accrue loyalty points (e.g., 20 points = Rs. 20) as liabilities until redeemed by the customer.
- Businessman receives Freedeem cash (e.g., 525 points = Rs. 525) with an additional 5% incentive.

3. **Payment to Businessman**:
- Two options for payment: top-up prepaid account or request cash payment within 7 days.

4. **Customer Referral and Installation Bonus**:
- Credit 10 royalty points to a customer's account for each new customer referral.
- Increase a businessman's wallet balance by Rs. 20 upon installation of Freedeem App.

### GST Implications:
- **Nature of Business**: Your app facilitates promotions through coupons and discount cards. For GST purposes, this would likely fall under the category of "Online Information and Database Access or Retrieval Services" (OIDAR) if services are provided electronically.

- **GST Calculation**:
- **Coupon Issuance**: GST would be applicable on the issuance fee of Rs. 1.
- **Coupon Redemption**: GST would be applicable on the redemption value of Rs. 25.
- **Loyalty Bonus**: GST would be applicable on the loyalty bonus provided (e.g., Rs. 20).

- **GST Rate**: The applicable GST rate would depend on the specific nature of the services provided and could be either 12%, 18%, or other rates specified by GST law for digital services.

### TDS Liability:
- Generally, TDS (Tax Deducted at Source) under GST is not applicable unless specifically mandated by GST regulations. Ensure compliance with Income Tax TDS provisions if payments to businessmen qualify for TDS under Income Tax Act provisions.

### Accounting for Transactions:
- Maintain detailed records of all transactions, including issuance and redemption of coupons, accrual and redemption of loyalty points, and payments to businessmen.
- Ensure invoices and records are maintained as per GST compliance requirements.

### Conclusion:
For precise guidance tailored to your specific business, including detailed accounting entries and compliance with GST and TDS regulations, it's advisable to consult with a qualified accountant or GST consultant. They can provide accurate advice based on the latest regulatory updates and ensure your business operations are compliant with tax laws.