GST Exemption on Gift Vouchers: 55th GST Council Meeting to consider Benefits for Retail Sector
The speculations come amidst multiple proposed changes to the GST rates across varied sectors
The Group of Ministers at the 55th Goods and Service Tax ( GST ) Council meeting, convening today (21st December, 2024) at Jaisalmer, Rajasthan are touted to propose GST exemptions on Gift Vouchers, providing relief for players in the domestic retail industry. One of the possible outcomes of the 55th GST Council meeting to be chaired by Union Finance Minister Nirmala Sitharaman, is...
The Group of Ministers at the 55th Goods and Service Tax ( GST ) Council meeting, convening today (21st December, 2024) at Jaisalmer, Rajasthan are touted to propose GST exemptions on Gift Vouchers, providing relief for players in the domestic retail industry.
One of the possible outcomes of the 55th GST Council meeting to be chaired by Union Finance Minister Nirmala Sitharaman, is the elimination of GST on gift vouchers provided by companies operating in the retail market industry.
Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here
Gift vouchers in the retail industry refer to prepaid cards or certificates issued by companies, that may be redeemed by customers to purchase goods or services up to a specific value,within a specified time period. Retailers often use gift vouchers as promotional tools to boost sales, sustain customer loyalty, or reward existing customers.
Retail Industries often employ physical or digital gift vouchers with the same gaining widespread prominence during festive seasons or as part of marketing campaigns. However, their taxation under GST has been a subject of debate, with varying rules depending on their classification as goods, services, or instruments.
As per a report released by The Economic Times, top government officials involved in the discussions revealed that the GST Council law panel has proposed classifying gift vouchers as prepaid instruments acknowledged by the Reserve Bank of India (RBI). These instruments, used as a form of consideration to fulfill obligations, would be categorized in an alternative manner, exempting them from GST taxation.
Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here
Failure to consider the gift vouchers as ‘consideration’ would pave way for “actionable claims” that may be instituted before the requisite authorities.
Economic Bipin Sapra, partner at Ernst and Young (EY) The speculations come amidst widespread uncertainty about the nature of such gift vouchers - whether the same may be classified as instruments for exchange or as supplies themselves.
The perplexities were deepened by an earlier decision of the Karnataka Appellate Authority for Advance Rulings in In Re: M/s Premier Sales Promotion Pvt Ltd. (2022 TAXSCAN (AAAR) 118) where it was held that gift vouchers were goods and subject to GST.
Read More: 18% GST payable on Supply of Vouchers: AAAR
The 55th GST Council meeting is also slated to discuss revision of GST rates on insurance premiums, sale of used electric vehicles and rationalization of tax on multiple consumer goods including luxury watches, shoes, pens and apparel priced above a certain ceiling.
Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here
Read More: Madras HC sets aside Unreasoned Order imposing GST on Vouchers, Directs to Issue Fresh Order Considering Taxpayer’s Contentions Attended by multiple members of State Governments, including Finance Ministers and Chief Ministers, the Meeting shall have extensive deliberation on the tax rates on revised tax slabs for sin goods, insurance premiums and consumer goods among others.
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