Gst Voucher Clarification

GST Treatment of Vouchers Clarified: Circular No. 243/37/2024-GST

On December 31, 2024, the Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 243/37/2024-GST to address ambiguities surrounding the Goods and Services Tax (GST) treatment of vouchers. The circular aims to ensure uniformity in the implementation of GST provisions and clarify issues related to transactions involving vouchers, trading by distributors, and unredeemed vouchers (breakage).

Key Clarifications:

1. Nature of Transactions in Vouchers

The circular provides a detailed analysis of whether transactions in vouchers constitute a supply of goods or services. Key highlights include:

• Definition Analysis:
• Classification:
• Conclusion:

2. Distribution Models of Vouchers

Two primary distribution models are addressed:

• Principal-to-Principal (P2P) Basis:
• Agency/Commission Basis:

3. GST on Additional Services

The circular addresses scenarios where additional services such as advertising, co-branding, marketing, technology support, and customer support are provided by distributors or other entities to the voucher issuer:

• GST is applicable on service fees or charges for such additional services.
• The applicable GST rate depends on the nature of the services provided.

4. Unredeemed Vouchers (Breakage)

Unredeemed vouchers, or breakage, arise when vouchers remain unused beyond their validity period. The circular clarifies:

• No Underlying Supply:
• Taxability:

Implications

This circular offers much-needed clarity for businesses and tax practitioners dealing with vouchers, ensuring consistency across field formations. Businesses distributing or issuing vouchers should align their GST practices with these clarifications to avoid disputes and litigation.

References:

• Circular No. 243/37/2024-GST
• RBI Guidelines on Pre-Paid Instruments