Nisha (Job) (140 Points)
22 August 2018The company is providing referral/sign up points in form of cash for their customers. If the customer then wants to subscribe their services after sign up, these points would be reduced and in some cases and the balance would be payable by customer.
My query is in some cases it is amounting to 100% discount on the sales value. What would be the GST implication on this??
In case if no tax need to be paid does ITC need to be reversed in this case?
Pankaj Rawat
(GST Practitioner)
(55047 Points)
Replied 22 August 2018
CA Shree Jain
(Chartered Accountant)
(1572 Points)
Replied 22 August 2018
Legal Issue: Most of the apparel retail chains have a concept of Loyalty Cards. Points earned on these Loyalty Cardss are set off from the total bill amount. Loyalty Points accrue as per a pre-declared policy generally 1 point for a certain amount spent by the Member. Clarity is required whether set off allowed against such loyalty points is to be treated as ‘dsicount’ within the purview of the CGST Act, or whether it will be treated just as a mode of payment, thereby requiring payment on the total value of supply ?
Response of the SectoralGroupIn case of redemption of loyalty points for a purchase, the Group is of the view that Loyalty Points are nothing but a mode of payment, and that the GST must be paid on total value of supply irrespective of the fact that loyalty points are utilized while making a purchase. This needs to be vetted by the Law Committee.
Nisha
(Job)
(140 Points)
Replied 22 August 2018
So whether ITC needs to be reversed? how the reversal amount need to be calculated?
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