Vouchers Under GST: Sections 12(4) and 13(4) Are Gone

Vouchers Under GST explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.

A gift card is sold in March and redeemed in September. Under the original scheme, GST had to be pinned to one of those two moments, and s.12(4) and s.13(4) supplied the rule: date of issue if the underlying supply was identifiable at that point, date of redemption otherwise.

It never worked cleanly. Deciding whether a supply was "identifiable" at the issue of a multi-brand voucher, taxing an instrument that was itself a means of payment, and dealing with vouchers that were never redeemed — each produced its own dispute.

Both sub-sections have now been omitted.

Sections 12(4) and 13(4) of the CGST Act were omitted by the Finance Act, 2025, with effect from 1 October 2025. The omission follows Circular No. 243/37/2024-GST dated 31.12.2024, which held that vouchers are not a supply of goods or services — an RBI-recognised prepaid instrument is money under s.2(75); any other voucher is an actionable claim other than a specified actionable claim. Both sit outside GST. Tax arises only on the underlying supply at redemption. Breakage — unredeemed value — is not taxable.

What a voucher is, statutorily

Section 2(118) defines a voucher as an instrument where there is an obligation to accept it as consideration or part consideration for a supply, and where the goods or services to be supplied, or the identities of their potential suppliers, are indicated on the instrument or in related documentation, including its terms of use.

Coupons, tokens, tickets, licences, permits and passes are the examples given.

The definition never made a voucher goods or services. It described an instrument. The old s.12(4) sat awkwardly on top of that, treating the voucher as though it carried its own time of supply.

What the circular settled

Circular No. 243/37/2024-GST worked through the classification and reached three conclusions.

Vouchers are not a supply. Where the voucher is a prepaid instrument recognised by the RBI, it falls within "money" in s.2(75), and money is excluded from both "goods" (s.2(52)) and "services" (s.2(102)). Where it is not RBI-recognised, it is an actionable claim — and since it is not a specified actionable claim under s.2(102A) (betting, casinos, gambling, horse racing, lottery, online money gaming), Schedule III keeps it outside the scope of supply.

Either way, the transaction in the voucher is not taxable. GST attaches to the goods or services actually supplied when the voucher is redeemed.

Distribution depends on the model. Trading vouchers on a principal-to-principal basis — a distributor buying and reselling on its own account — is not a supply, so no GST. But where a distributor or agent acts on commission or fee, that commission is consideration for a supply of services and is taxable. So are ancillary services — marketing, co-branding, technology support — supplied for a consideration.

Breakage is not taxable. Where a voucher expires unredeemed, there is no underlying supply, so the amount the issuer retains is not consideration for anything. No GST.

Why the sections had to go

Once the circular established that a voucher transaction is not a supply, sections 12(4) and 13(4) were incoherent. Time of supply provisions only make sense where there is a supply. Retaining them invited officers to argue that Parliament had contemplated a taxable event at the issue of a voucher, which the circular had just denied.

The Finance Act, 2025 removed them — notified through Notification No. 16/2025-CT dated 17.09.2025, w.e.f. 01.10.2025. The ICAI commentary in Volume I puts it plainly: the omission aligns the statute with the clarification, affirming that transactions in vouchers per se are not a taxable supply.

What this means operationally

Issuers. No GST on issue. No output liability on the face value collected. Revenue recognition for accounting purposes and the GST event now diverge, which needs to be visible in the reconciliation for GSTR-9C.

Redemption. Tax at the ordinary rate on whatever is supplied, valued at the transaction value under s.15. Where the voucher covers part of the price, GST applies to the full consideration — the voucher portion is consideration, not a discount.

Distributors. The model determines the answer. A P2P distributor holding voucher inventory on its own account is outside GST on the trade, but must be able to show it bears the commercial risk. An agency distributor pays GST on the commission. Contracts drafted ambiguously will be read against whichever characterisation the department prefers.

Breakage. Not taxable, but keep the ageing schedule. The exemption depends on there being no underlying supply, so any arrangement where expired value is converted into something else needs separate analysis.

ITC on procurement. A business buying vouchers to give employees or customers is buying an instrument, not a supply — so there is no tax to credit. Where a voucher is given free to a customer as part of a promotional scheme, the ordinary questions about gifts and s.17(5)(h) arise on the underlying goods, not on the voucher.

Key takeaways

• s.12(4) and s.13(4) omitted w.e.f. 01.10.2025 by the Finance Act, 2025.
• A voucher is money (if an RBI-recognised prepaid instrument) or an actionable claim — neither is a supply.
• GST arises only on the underlying supply at redemption.
• Principal-to-principal trading in vouchers is not taxable; commission-based distribution is.
• Breakage is not taxable — no supply, no consideration.
• The governing clarification is Circular No. 243/37/2024-GST dated 31.12.2024.

Read next

• Time of Supply of Goods: When Liability Arises
• Time of Supply of Services: Rules and Examples
• Schedule III: Activities Neither Goods Nor Services
• Section 12-13 CGST Act: Time of Supply

Disclaimer: Positions stated as on 5 September 2026, based on ICAI GST Volume I (2026 edition) and Circular No. 243/37/2024-GST.