Tds liability on purchase of gift vouchers from flipkart

TDS 16353 views 2 replies

Mihir Jhaveri

CA Job

20 Points Posted on 19 January 2015

Query on applicability of TDS on Purchase of Flipkart/ Snapdeal Gift Vouchers for distributing to customers as reward/ sales promotion

Background/ Case facts:

-Our company is purchasing Flipkart/ Snapdeal gift vouchers (GV) and giving to distributors/ customers on achivement of targets

-These GVs are Prepaid Instruments. And companies issuing such GVs has to take RBI approval / purchase GVs through authorised intermediaries having approval from RBI.

-These GVs have fixed validity period. These are non-renewable/ non refundable vouchers. And they have to be redeemed at the time of online purchase of goods/service from the portal.

-Portals (flipkart/snapdeal) are not charging anything extra as service charge for issuing these GVs. And accepting these vouchers as currency/ money at the time of redemption.

-Portals are claming that these GVs are neither "goods" nor "services". Hence they do not apply VAT/ ST while selling these GVs.

-Furhter, sellers of GV also claim that TDS will not be applicable at all.

Query:

-Whether TDS has to be deducted at the time of making payments for purhcase of such GV.

-Is there any circular/ clarification issued by CBDT in this regard?

Thanks in anticipation.

Replies (2)

Quick Summary

The query examined whether TDS applies on the purchase of Flipkart or Snapdeal gift vouchers distributed as sales incentives. The response suggested that no TDS is applicable, as gift vouchers function like prepaid instruments or advances for future purchases and are not treated as services. Further discussion highlighted that vouchers may be redeemable for both goods and services, creating ambiguity in their tax characterization, but no specific CBDT clarification was cited.

Manoj BG

Tax Professional and in Service

1795 Points Posted on 19 January 2015

Hi Mihir,

No TDS applicable in this case as underlying transaction is sale of goods against the vouchers. Gift Vouchers on flipkart/Snap deal can be redeemed basically for purchase of goods. So sale of gift vouchers for redemption against purchase of goods is as good as advance received for sale in hands of Flipkart/Snap deal although there is no surety that gift vouchers will actually redeem in given time.

Thanks and Regards,

Manoj B. Gavali

Mihir Jhaveri

CA Job

20 Points Posted on 19 January 2015

Thanks Manoj.

Two followon questions....

1. GV sellers are claiming this is not sale of goods and not sale of services as well. If we consider this as sale of goods, should we not expect that the invoice should have VAT/CST TIN # mentioned thereon? As well as VAT/CST not applied seperately in the invoice.

2. GV holder can purchase goods as well as avail services from portal. Since there is no such restriction. Thus it may not amount to sale of goods at all times.

Originally posted by : Manoj B. Gavali
	Hi Mihir, No TDS applicable in this case as underlying transaction is sale of goods against the vouchers. Gift Vouchers on flipkart/Snap deal can be redeemed basically for purchase of goods. So sale of gift vouchers for redemption against purchase of goods is as good as advance received for sale in hands of Flipkart/Snap deal although there is no surety that gift vouchers will actually redeem in given time. Thanks and Regards, Manoj B. Gavali