Taxability of gift vouchers under GST
As a part of sales promotion, Kalyan Jewellers issued different types of gift vouchers, which were sold through offline and online channels
– Tamil Nadu AAAR held that the gift vouchers are taxable at the time of their issuance, irrespective of whether they are for identified or unidentified goods or services
– Aggrieved by the order of AAAR, company filed a writ petition before Madras HC
– The HC examined the nature and characteristics of gift vouchers and observed that gift vouchers were pre-paid instruments (PPIs) issued by Kalyan Jewellers for facilitating the purchase of goods and services from its own brand only. Therefore, they fell under the category of closed system PPIs as defined by the Reserve Bank of India.
– HC referred entry 6 of Schedule III of the CGST Act which covers actionable claims and noted gift vouchers were debt instruments that represented an enforceable debt owed by Company to the holder of voucher
– The HC concluded that gift vouchers issued by Kalyan Jewellers were actionable claims and hence, not taxable under GST unless they were issued for specified or identified goods and for a specified value.
In cases where the goods or services remained unidentified for future purchase, GST would be leviable only at the time of redemption of the voucher.
If the Gift Vouchers/Cards are issued for specified or identified goods, tax shall be payable at the time of issuance of such gift vouchers