After the 55th GST Council: CBIC clarifications on vouchers, ex-works ITC, ECOs and online services

Following the 55th GST Council Meeting on 21 December 2024, the Central Board of Indirect Taxes and Customs issued multiple circulars providing much-needed clarity on GST matters where interpretation had varied across the industry.

GST treatment of vouchers

Vouchers themselves do not trigger GST. A voucher qualifies either as money under RBI regulations or as an actionable claim under the CGST Act, and in both cases transactions involving the vouchers themselves do not attract GST, though purchasing goods or services with vouchers may be taxable.

Where distributors sell vouchers on a principal-to-principal basis as pure trading, no GST applies. GST does apply to commission or fees earned by agents selling vouchers, and to ancillary services such as advertising and marketing. Unredeemed vouchers generate no taxable supply, so breakage value remains outside the scope of GST.

Input tax credit for ex-works contracts

Under ex-works arrangements, dealers can claim input tax credit when goods are handed to a transporter at the supplier's premises rather than on physical receipt, provided the goods serve business purposes and are not lost, stolen or disposed of as gifts.

Electronic commerce operators and Section 9(5)

ECOs paying GST under Section 9(5) need not reverse input tax credit proportionately. That GST liability must, however, be paid in cash and cannot be offset against input tax credit.

Place of supply for online services

For online services supplied to unregistered persons, suppliers must identify the recipient's location where available, or default to the supplier's location. Invoices must record the recipient's state. This applies to OTT platforms, e-newspapers and subscription services, with declarations required in outward supply forms.