By Subhash Narayan
Expanding the scope of taxation, the tax department will now levy GST on the supply of e-vouchers thereby bringing even exclusive marketing companies under the tax net.
In a recent ruling the Authority for Advance Ruling, Karnataka brought supplies of e-vouchers made by marketing firms liable for 18 per cent GST terming these instruments as part of overall supply of goods and service having an underlying value that is taxable.
The order will now make marketing companies buying and supplying e-vouchers taxable at the specified rate on the value of purchase of such vouchers.
This ruling will also impose a tax of 18 per cent on all the E-vouchers, whether identifiable or not on the issuance of such vouchers. This will lead to accumulation of tax credit for companies using E-vouchers and supplying products like jewellelry, Household necessities such as edible oil, sugar, spices, tea, and coffee, processed food, laptops/computers, and Life-saving drugs that are listed for the lower rate of taxes.
“AAR has held that the supply of e-vouchers is taxable as goods at the rate of 18 per cent irrespective of the underlying item procured using such vouchers. This ruling also rejected the special provisions mentioned in GST rules concerning the time of supply related to the vouchers. This may lead to complications for numerous corporates using special vouchers that could not be identifiable to a particular product at the time of its issuance,” said Rajat Mohan, Senior Partner, AMRG & Associates.
The ruling came on application filed by Premier Sales Promotion on GST applicability on supply of e-vouchers made by it on behalf of companies to their clients. Three types of vouchers were supplied – gift vouchers, cash back vouchers and e-vouchers with multiple options.
(Subhash Narayan can be contacted at subhash.n@ians.in)
