Time of Supply – Vouchers
Please refer to discussion regarding time of supply of goods for some background discussion about actionable claims. For purposes of this discussion on time of supply of services, please note the following comments:
(i) the discussion on actionable claims being includible as vouchers is relevant vis -à-vis services for the only reason that certain transactions involving goods are deliberately treated as supply of services by Schedule II and to this extent actionable claims which are a sub-set of goods need to be referred in this Chapter;
(ii) vouchers are not entirely comprised only of actionable claims and services can also be included
Now, the time of supply in the case of vouchers is stated to be:
(i) the date of issue of voucher if the supply is identifiable at that point; or
(ii) in all other instances, the date of redemption of the voucher.
From the above provision, it can be seen that at the time of issue of voucher, it is possible that the supply is not identifiable. So, the following key statements can be considered in this regard:
(i) Vouchers may be issued with specific or non-specific end-use;
(ii) Vouchers are issued on payment of money;
(iii) Vouchers themselves are not legal tender;
(iv) Vouchers represent some carried value in money terms;
(v) Vouchers are accepted as substitute for payment for a supply due to their carried value ;
(vi) Vouchers are not merely receipts for pre-payment received;
(vii) Vouchers must be non-cancellable such that they cannot be reconverted back into money;
(viii) Vouchers may be in physical or digital form but comprise the above characteristics.
When vouchers are issued for specific end-use, then they are taxable as supply provided they otherwise satisfy the requirements of section 7 of the Act. Since, a specific provision exists in respect of time of supply of vouchers, they are not goods or services in themselves, but are singled out for the limited purposes of prescribing the time of their supply. And the rate of tax will be that applicable to goods or services they are issued in respect of or that applicable at the time of redemption. Vouchers are not merely receipts for pre-payment received because prescribing a specific time of supply would be redundant when time of supply already considers advance payments.
Please also note that the Government has issued the Payment and Settlement Systems Act, 2007 (‘PSS Act’) and accordingly, not everyone is permitted to issue instruments that may be used as a Payment System. RBI is expected to make major changes to the circular s issued in terms of the PSS Act by June 2017 but the framework or principles borrowed from the current circulars for the purposes of GST is expected to remain unaltered although changes may come in areas of governance, ease of doing business and inclusive growth in e-payment offerings through these Pre-Paid Instruments or PPIs. (refer RBI Circular No.RBI/DPSS/2017- 18/58 dated 11 Oct, 2017) 