18% GST on gift, cash back vouchers

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.