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Microlesson · 5-min read

Taxability of Vouchers under GST

# Taxability of Vouchers

GST treatment of vouchers depends on their nature and the role of the trader.

## A. Transaction in the Voucher Itself

Type of VoucherClassificationSupply?
Prepaid instruments (cards, wallets)Falls within definition of moneyNeither goods nor services → Not a supply
Other vouchersFalls within definition of actionable claim (and not a specified actionable claim)Schedule-III → Not a supply

Implication: The sale/issue of a voucher itself is never a supply. However, the supply of underlying goods/services for which the voucher is redeemed may be taxable in the usual way.

## B. Distributors, Sub-Distributors, Agents Trading in Vouchers

RoleGST Implication
Buying/selling vouchers on a Principal-to-Principal basis (earning margin on trade)Transaction in voucher = neither supply of goods nor services
Acting as agent for the voucher issuer (earning commission)GST applies on commission/fees of the agent
Providing additional services (advertisement, co-branding, technology, customer support) to the voucher issuer for feesGST applies on those fees

## C. Non-Redemption of Vouchers

If a voucher is never redeemed (expires unused) — not a supply, no GST. The amount retained by the issuer is not consideration for any supply.

Worked example

### Example 1

Q. A retail chain issues gift cards loadable up to ₹ 5,000. Customers later use these to buy products. GST on issue of card?

A. Card is a prepaid instrument → 'money' → issue of the card is not a supply. GST applies when the underlying goods are supplied on redemption.

### Example 2

Q. D Ltd. purchases vouchers from issuer for ₹ 80 each and sells them in the open market for ₹ 100 each, on its own account. GST on D Ltd.?

A. Principal-to-principal trade in vouchers → not a supply → no GST on the ₹ 20 margin.

### Example 3

Q. Mr. A acts as agent for V Ltd., selling V's vouchers to retailers and receiving ₹ 5 per voucher as commission. GST?

A. Agency relationship — commission of ₹ 5 is consideration for agency services → GST applies on the commission.

### Example 4

Q. A voucher worth ₹ 1,000 is sold but the buyer never redeems it. GST on the unredeemed amount?

A. Non-redemption is not a supply → no GST.

⚠️ Common exam mistakes

  • Charging GST at the time of issuing/selling a voucher — the transaction in the voucher itself is not a supply.
  • Treating margin earned by a principal-to-principal voucher trader as a service fee subject to GST.
  • Not charging GST on commission earned by an agent dealing in vouchers — this remains taxable.
  • Charging GST on unredeemed voucher amounts (breakage income) — not a supply.
Bare-Act text · CBIC Circular No. 243/37/2024-GST dated 31.12.2024 · click to expand
Circular No. 243/37/2024-GST dated 31.12.2024 — Clarifications on taxability of transactions involving vouchers: (i) transactions in vouchers (whether prepaid instruments or actionable claims) are neither supply of goods nor services; (ii) distribution of vouchers on principal-to-principal basis is not a supply; on principal-to-agent basis the commission/fee is taxable; (iii) additional services in relation to vouchers (advertisement, co-branding etc.) are taxable; (iv) unredeemed/breakage amounts on vouchers do not constitute consideration for any supply and are not taxable.
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