NEED YOUR VIEW.
WILL GST APPLY ON FACE VALUE
GST will not be applicable on the face value of vouchers issued by Sodexo to its clients or subsequently by employer to its employees, considering the definition of ‘services’ and ‘money’ under CGST Act.
As per CGST Act :-
“Services means anything other than goods, money and securities…..”
“money” means Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveler cheque, money order, postal or electronic remittance or any other instrument recognized by the Reserve Bank of India when used as consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value;
Section 4 of Payment and Settlement System Act, 2007 (PSS)provides that no person other than RBI shall commence or operate a payment system except under and in accordance with an authorization issued by RBI under the provisions of PSS Act. Section 7 of PSS Act grants power to RBI to issue an authorization for operating payment system
Sodexo have been granted authorization in terms of Section 7 of PSS for operation of payment system by issuance of their Meal & Gift Voucher & Smart Card in the form of paper based vouchers & Smart Card or Smart Meal card.
Hence, as money has been excluded from the definition of services and Sodexo meal vouchers/meal cards fall within the definition of instrument recognized by the Reserve Bank of India, any value loaded on it fall within the definition of money.
Hence face value of Sodexo vouchers shall continue to be outside GST.
GST ON COMMISSIONS/DELIVERY CHARGES
GST on client charges – GST @ 18% shall be applicable on the same
GST FOR ZERO COMMISSION CLIENTS
With respect to issuance of vouchers without levying any service charges – GST will not be applicable on the face value of the voucher as explained above, also, there will not be any GST on notional basis
Supporting Documents:
- Definition of Services that are chargeable to GST
- Definition of Money
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