Myntra not eligible for ITC on gift vouchers sourced from third party: AAR

Myntra is not entitled for input tax credit (ITC) on gift vouchers obtained from a third party and sent to clients engaging in a loyalty programme, according to the Karnataka Appellate Authority for Advance Ruling (KAAAR).

In response to an appeal filed by e-commerce store Myntra, KAAAR stated that the basic criteria for qualifying to the input-tax-credit (ITC) is that there be an inward supply of either goods or services, or both, on which the supplier charges tax.

“In this matter, as stated by the Karnataka High Court in the judgement (of Premier Automobiles, 2023), the vouchers are held to be neither goods nor services and cannot be taxed under GST. “As a result, because the vouchers offered to be bought by the Appellant are neither commodities nor services, the question of ITC eligibility does not arise,” it stated in a recent judgement affirming KAAR’s (Karnataka Authority for Advance Ruling) ruling with a minor change.

Myntra approached AAR last year, stating that it intends to launch a loyalty programme in which users receive loyalty points for their purchases. The platform would allow buyers to redeem these points in return for vouchers and subscriber packages, subject to certain limitations and conditions. The retailer obtained these vouchers and subscription packages from a third party and paid the applicable Goods and Services Tax (GST). The concern was whether these vouchers would be eligible for input tax credit.

For Official Ruling Download PDF Given Below: