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Kalyan Jewellers India Ltd has approached the Appellate Authority for Advance Ruling (AAAR) against the ruling by the Tamil Nadu state Authority for Advance Ruling (AAR), which had said that GST at 12 per cent or 18 per cent would be levied depending on whether on such pre-paid instruments was paper-based or magnetic strip based respectively.
Modifying the AAR verdict, the AAAR has clarified that GST will be levied not on the supply of vouchers but on the underlying supply of goods/ services at the time of redemption and the time for payment of GST will be dependent on the provisions detailed in the GST law.
In its order, the AAAR said that vouchers are neither goods nor services and the GST law recognises it as an instrument of consideration (non-monetary form) for future supply.
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EY Tax Partner Abhishek Jain said the taxability of vouchers has always been a grey area, both under the pre-GST and post GST regime.
“This AAAR ruling is welcome and has provided appropriate clarity to the industry on the taxability of vouchers,” Jain added.