Clarity needed

This query is : Resolved

Gem99 (Querist)
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27 November 2023 Can anyone clarify what is right ?

https://news.caclubindia.com/govt-explores-potential-relief-from-gst-on-vouchers-and-gift-cards-22774.asp

1.The article has some wrong information ,for example - single-purpose or identifiable vouchers, which can only be redeemed for specific goods or services, face taxation at the time of their issuance since the nature of the goods or services is known in advance.

This is wrong as at the time of redemption, the GST or tax is being charged again that is why industry is not charging any tax when vouchers are issued as it cannot be taxed twice.

1. Further,it has been established by high court in Jan 2023 that these vouchers are PPI and no gst is applicable .

2.What happens to businesses who have paid lacs and lacs in GST due to lack of this clarity ? Getting refund from gst dept is a difficult task especially when amount is huge.The big players in industry were neither charging GST in the past nor in the present hence what about businessmen who paid huge amounts of taxes on these vouchers ,what is the clarity for them ?

3.When will the clarity be issued by GST council ? Its been 6 years+ already..... Will this issue be taken up in 53rd meeting or just through some notification clarification will be issued....

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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06 July 2024 The article you referred to discusses the complexities around GST implications on vouchers and gift cards, highlighting some key points and issues. Here's a breakdown of the concerns raised and the current status:

1. **Taxation at Issuance vs Redemption**:
- The article mentions taxation at the time of issuance for single-purpose or identifiable vouchers, which may not align with current practices where GST is often charged at the time of redemption. This discrepancy raises concerns about double taxation and the practical application of GST rules on vouchers.

2. **High Court Ruling on Vouchers as PPI**:
- According to the article, a High Court ruling in January 2023 classified these vouchers as Prepaid Payment Instruments (PPI) and concluded that GST should not be applicable. This indicates that there might be ongoing legal interpretations that could influence how GST is applied to vouchers in different scenarios.

3. **Refund Challenges for Businesses**:
- Businesses that have paid substantial amounts of GST on vouchers in the absence of clear guidelines may face challenges in obtaining refunds. Refunds from tax authorities can indeed be cumbersome, especially for large amounts. The lack of clarity and subsequent changes in interpretation can further complicate this process.

4. **Clarity from GST Council**:
- The article raises the question of when the GST Council will provide clarity on this matter, noting that it has been a longstanding issue (over 6 years). Businesses are looking for clear guidelines to avoid ambiguity and ensure compliance without unintended tax liabilities.

### Conclusion:
The issues highlighted in the article underscore the need for clear and consistent guidelines from the GST Council regarding the taxation of vouchers and gift cards under GST. Businesses affected by these uncertainties may need to monitor developments closely, seek professional advice on compliance, and consider any legal implications or rulings that could affect their GST liabilities and refund claims.