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The GST Council declared that voucher transactions will not be subject to GST, providing relief to retailers. This decision clarifies that vouchers are not considered goods or services, resolving previous disputes and aligning with RBI's classification of vouchers as prepaid instruments. The council also discussed potential tax adjustments on various items, but decisions were deferred due to disagreements.
In a significant move during its 55th meeting in Jaisalmer, the GST Council clarified that transactions involving vouchers will be treated as neither a supply of goods nor services and, consequently, will not face taxation under the Goods and Services Tax (GST) framework, sources have told ET Bureau.
This decision is expected to bring much-needed clarity and resolve longstanding disputes surrounding the taxation of gift vouchers.
The decision follows requests from the retail sector for clarity after the Karnataka Authority for Advance Rulings previously ruled that vouchers were taxable as goods in the case of Premier Sales Corp. The new ruling provides relief to companies and retail businesses that frequently use vouchers for promotions.
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