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GST Update on The Hazy View: Money value

GST Update on The Hazy View: Money value

The draft valuation Rules for determination of value of supply of goods or services. A new term ‘money value’ has been used in Rule 6(6) of the Determination of Value of Supply Rules. It is been stated that the value of a token, or a voucher, or a coupon, or a stamp (other than postage stamp) which is redeemable against a supply of goods or services or both shall be equal to the money value of the goods or services or both redeemable against such token, voucher, coupon, or stamp.

The issue that arises here is the meaning of money value which is not clear. Say for example, if a pre-paid voucher provides a talktime of Rs. 600/- on re-charge of Rs. 500/-, in that case, whether the money value is to be taken as Rs. 600/- even when the actual payment is made of Rs. 500/-. Moreover, as every supply under GST regime will be leviable to tax, the company issuing voucher will pay tax on the entire amount whereas practically, there will be no tax collection at subsequent stages as there will be no value addition and rather the vouchers will be supplied at lower price. It will be more clear from example if we elaborate the above example further that company sells voucher of Rs. 600 @ 400 to wholesaler. But they have to pay tax on Rs. 600 only as per money value concept. The wholesaler will get the credit of GST paid on Rs. 600. But he supplies to retailers @ 500 and pay tax again on Rs. 600. But nothing goes from his pocket as he has already taken credit on Rs. 600 (same price on which credit is taken). Same will be situation at the end of retailers also. Thus the term money value should have been clarified or the clause might attract suitable changes.

Thus, since this term has been newly introduced, hence a lot needs to be clarified on this term as it isn’t free from ambiguity. Also, if it isn’t clarified there might arise a number of litigations which may lead to undue hardship for assessee.

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