Clarification on Various Issues Pertaining to GST Treatment of Vouchers

Circular No. 243/37/2024-GST dated 31.12.2024

Key Issues Addressed:

1. Classification of Transactions in Vouchers
   • Vouchers may function as payment instruments creating obligations for suppliers to accept them as consideration for goods or services.
   • Legal definitions of “goods,” “services,” and “vouchers” under the CGST Act are explained, establishing that:
   • If recognized by RBI as pre-paid instruments, vouchers are categorized as “money,” excluded from goods or services.
   • If not RBI-recognized, vouchers may be treated as actionable claims but still excluded from taxable supplies under Schedule III of the CGST Act.
2. GST Treatment for Voucher Transactions by Distributors/Agents:
   • Principal-to-Principal Basis:
     • Pure trading of vouchers is not taxable as it is neither a supply of goods nor services.
   • Agency Basis:
     • Distributors or agents earning commission/fees for services provided (e.g., marketing or distribution) are liable to GST on those earnings.
3. Additional Services Linked to Vouchers:
   • Activities such as advertisement, co-branding, customization, or technology support provided to voucher issuers are taxable as services under applicable GST rates.
4. GST on Unredeemed Vouchers (Breakage):
   • Amounts attributed to unredeemed vouchers are not considered taxable since no supply of goods or services occurs when vouchers expire unused.
   • No GST is payable on breakage amounts retained by the voucher issuer.