When it comes to GST, one thing that often confuses both businesses and accountants is how to determine the time of supply when the transaction involves vouchers, gift cards, or other miscellaneous (residual) cases.
We all know GST is payable when a “supply” occurs, but the tricky part is identifying exactly when that happens — especially when there’s no traditional invoice or payment date, like in the case of vouchers.
This article breaks down the rules under Section 12(4) and Section 12(5) of the CGST Act, explains the logic in plain language, and includes practical examples straight from the ICAI study material.
What Are Vouchers Under GST?
A voucher is simply a token, coupon, or instrument that can be redeemed for goods or services at a later stage. It can be:
- A gift card (e.g., Amazon or Big Bazaar voucher)
- A prepaid mobile recharge coupon
- A discount or promotional voucher redeemable for specific products
Under GST, such vouchers are considered “supply” — but the challenge is deciding when GST should be paid:
- at the time of issuing the voucher, or
- at the time of redemption (when the customer actually uses it).
Section 12(4) – Time of Supply for Vouchers
Section 12(4) of the CGST Act provides a clear rule:
“In case of supply of vouchers by a supplier, the time of supply shall be —
- the date of issue of voucher, if the supply is identifiable at that point; or
- the date of redemption of voucher, in all other cases.”
Let’s unpack what this means.
Case 1 – When Supply is Identifiable (Voucher for a Specific Item)
If the voucher is for a specific product or service, the supply is known at the time of issue. So, GST becomes payable immediately when the voucher is issued.
Example 1 – Identified Supply
A pizza shop issues a ₹500 voucher that can only be redeemed for a medium-sized pizza. Here, the supply (pizza) is clearly identifiable when the voucher is issued.
👉 Time of Supply = Date of Issue of Voucher
Reason: Since it’s clear what the voucher is for, GST liability arises immediately when it’s issued — just like a prepayment for a known product.
Case 2 – When Supply is Not Identifiable (Generic or Open Vouchers)
If the voucher can be used to buy any goods or services, the supply is not identifiable at the time of issue. In that case, GST becomes payable when the voucher is redeemed.
Example 2 – Unidentified Supply
A Ltd. issues a ₹1,000 gift voucher that can be used to buy any item from its store. Since the supply isn’t known at the time of issue (the customer might buy clothes, electronics, or accessories), GST liability arises only at the time of redemption.
👉 Time of Supply = Date of Redemption
Reason: The actual supply is known only when the customer redeems the voucher for a specific good or service.
Case 3 – Third-Party Vouchers and Distribution
Sometimes, vouchers are issued by a third party (like Paytm, PhonePe, or Amazon Pay) and later redeemed at participating outlets.
In such cases:
- The issuer of the voucher (e.g., Paytm) doesn’t make the actual supply of goods/services.
- The merchant who redeems it makes the actual supply.
So, the time of supply for the merchant will depend on when the voucher is redeemed, not when it was sold by the platform.
Why This Distinction Matters
The distinction between “identifiable” and “non-identifiable” vouchers prevents double taxation. Imagine if GST was paid when the voucher was sold and when it was redeemed — that would lead to unnecessary duplication.
So, the law ensures GST is collected only once, at the correct point.
Accounting Perspective – Voucher Liability
In accounting terms, when vouchers are issued, the business records:
- Debit: Cash/Bank
- Credit: Unearned Revenue / Deferred Income (since supply hasn’t happened yet)
Only when the voucher is redeemed, the revenue is recognized and GST is paid — unless the supply was identifiable at issuance.
Section 12(5) – Residual Cases (When No Other Rule Applies)
After covering all the specific cases (normal goods, reverse charge, vouchers), the law still leaves room for rare or uncertain situations — these are called residual cases.
Section 12(5) acts as a “catch-all” rule:
“Where it is not possible to determine the time of supply under the provisions of sub-sections (2), (3), or (4), the time of supply shall be —
- the date on which a periodical return is to be filed, if the return is required to be filed; or
- the date on which the tax is actually paid, in any other case.”
In Simple Terms
If you cannot find the time of supply using earlier sections — meaning there’s no clear date of invoice, payment, or voucher redemption — then:
- If a return is filed → GST is considered payable on the return due date, or
- If no return applies → GST becomes payable on the actual date of tax payment.
This ensures that every taxable supply is captured, even if something goes wrong with the normal process.
Example 3 – Residual Case (Return-Based Liability)
A supplier forgets to issue an invoice for goods delivered in April and realizes it only in July. In this case, since Section 12(2) rules can’t be applied (no invoice or payment date recorded), the time of supply defaults to the due date of GST return for April (i.e., 20th May).
👉 Time of Supply = 20th May (Return due date for April)
Example 4 – Residual Case (No Return Required)
Suppose a person makes a taxable supply but isn’t required to file any return (say, a one-time transaction or late voluntary registration). Here, time of supply = date on which tax is actually paid to the government.
Interest or Late Fee on Delayed Payment – Section 12(6)
There’s also a small but important rule regarding interest, late fees, or penalties charged for late payments. As per Section 12(6):
“The time of supply to the extent it relates to an addition in the value of supply by way of interest, late fee, or penalty for delayed payment of any consideration shall be the date on which the supplier receives such addition in value.”
In short — if you charge a customer extra for late payment, GST on that extra amount becomes payable when you receive it, not earlier.
Example 5 – Interest on Delayed Payment
A Ltd. sold goods to B Ltd. on 6th June with a payment clause:
“2% monthly interest if payment is delayed beyond 15 days.””
B Ltd. pays the invoice on 6th July, along with ₹500 interest.
Here’s how time of supply works:
- GST on goods → 6th June (invoice date)
- GST on interest → 6th July (date interest received)
Quick Recap Table
| Scenario | Time of Supply |
| Voucher for specific product | Date of issue of voucher |
| Voucher for general use | Date of redemption |
| Residual case (return filed) | Due date of return |
| Residual case (no return) | Date of tax payment |
| Interest/penalty for delay | Date of receiving amount |
Key Takeaways
- Identify the Voucher Type – Is it for a specific supply or a general one? That determines GST timing.
- GST Once, Not Twice – GST is charged only at issue or redemption, not both.
- Record Vouchers Properly – Keep clear records of issue and redemption dates; GST audit teams often check these.
- Residual Rule as a Safety Net – If no rule fits, GST becomes due at the return due date or payment date.
- Watch Out for Interest Clauses – Late payments attract separate GST on the interest amount.
Why It Matters
These rules ensure that GST liability always arises at the right moment, even in unusual cases like vouchers or delayed recognition. They plug the gaps where typical supply events (invoice, payment, delivery) don’t apply — helping businesses stay compliant and avoid future disputes.
In short:
Every supply has a “moment of truth” — and under GST, that moment is called the Time of Supply. Whether it’s a pizza coupon, a shopping voucher, or an unrecorded transaction — the law ensures tax is recognized at the right time.
