Skip to main content

Goods bought with loyalty points will face tax under GST

By

Your shopping out of the accumulated loyalty or bonus points will face tax under the goods and services tax (GST) regime. GST would be levied on the total price of the product and not on the discounted value after adjusting the bonus, loyalty or rewards points. 
“Loyalty points are nothing but a mode of payment, GST must be paid on total value of supply irrespective of the fact that loyalty points are utilised while making a purchase,” according to a report on textiles prepared by a group of officials. 
The government had set up 18 sectoral groups to ensure smooth transition to GST. The law committee, which is meeting on Thursday and Friday, would take a final view on this now. 
Loyalty cards are very popular with retail chains these days as a means of coaxing customers to make repeat purchases. Customer earns certain bonus points on shopping at stores and these points can then be set off from the total bill amount in subsequent purchase. Usually, a customer earns 1 point for a certain amount spent by him. 
At present, there is some lack of clarity on the treatment of these points. While some stores charge value-added tax on it, others don’t treating them as discount. The GST, which replaces multiple central taxes such as central excise duty, service tax and state taxes such as value-added tax, purchase tax, octroi, has taken into its fold some practices followed under the excise duty and some under state taxes.
Globally, in some countries these are treated as discounts. 
Experts favour excluding loyalty points from the GST liability calculation. “Ideally, GST should be paid on the amount after reducing the sum attributable to loyalty points, as it is essentially in the nature of discount provided the other prescribed conditions are met. However, under VAT also, many retailers were paying tax on full value (i.e without adjusting for loyalty points discounts),” said Pratik Jain, leader, indirect taxes, PwC India. 
The Economic Times, New Delhi, 21st July 2017

Comments

Post a Comment

Popular posts from this blog

Govt’s gamble on GST cuts: What do the bond and currency markets signal?

By
  It’s not just humans who suffer from cognitive biases; markets do too. Interestingly, different financial markets exhibit distinct biases, each interpreting events through its own prism of prejudice. Take the recent announcements on GST reforms: equity markets have chosen to view them through the lens of growth, while bond and currency markets are focusing on potential macroeconomic risks—fiscal pressures and current account challenges. So, which lens captures the true pulse?Equity markets may be right in expecting GST reforms to revive consumption, which has remained lacklustre for a while. But the key question remains—will this revival come at the cost of broader macro stability?It is well known that consumption stocks have rallied since the GST rationalisation announcement. But what about bond markets? What signals are they sending since this rejig was announced from the ramparts of the Red Fort?The signs aren't encouraging. Bond prices have slumped and yields have surged sinc...
Post a Comment
Read more

Luxury carmakers urge clarity on GST rates to boost festive season sales

By
  A clear picture regarding new GST rates at the earliest will help the overall auto industry, including the luxury car segment, to regain momentum in the ongoing quarter, which generally sees enhanced sales on account of the festive season.The high-powered GST Council, chaired by Finance Minister Nirmala Sitharaman, will meet on September 3-4 to discuss moving to a two-slab taxation.In an interaction with PTI, BMW Group India President and CEO Hardeep Singh Brar said the recent speculation about the change in GST rates has caused uncertainty in the minds of consumers.Consumer interest and demand is strong, but they (prospective buyers) have adopted a wait-and-watch approach, and this delayed decision-making is impacting new vehicle sales at a certain level, he noted."Expediting clarity on GST rates is essential to get back to speed and ensure the auto sector's contribution to economic growth during this quarter is robust," Brar stated.He also hoped that the sustainable p...
Post a Comment
Read more

Sebi proposes tighter norms for green bond third-party reviewers

By
  Sebi on Friday said it has proposed to tighten the norms to appoint independent third-party reviewers or certifiers for green debt securities to align them with requirements for other ESG-linked bonds.In a draft circular, Sebi said that the current norms for green bonds, introduced in February 2023, lack detailed requirements around reviewer independence, conflict of interest mitigation, and disclosure standards that are now in place for other ESG-linked securities under a June 2025 circular.The regulator's latest proposal seeks public comments on a revised framework that would bring parity by incorporating comprehensive criteria for third-party certifiers of green bonds on non-convertible securities.Under the proposed norms, issuers of green debt securities will need to appoint reviewers who are independent of their management, directors, and key managerial personnel. These reviewers will be remunerated in a way that prevents any conflicts of interest and possess relevant expert...
Post a Comment
Read more