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Clarification regarding taxability of supply of securities under Securities Lending Scheme, 1997

..... h Block, New Delhi, the 11th October 2019 To, The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioner of Central Tax (All) / The Principal Director Generals/ Director Generals (All) Madam/Sir, Subject: - reg. Trade has requested clarification on whether the supply of securities under Securities Lending Scheme, 1997 ( Scheme ) by the lender is taxable under GST .....

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..... ending their securities to the borrowers. The security lending mechanism is depicted in the diagram below: - 2.2 In the above chart: (i) Lender is a person who deposits the securities registered in his name or in the name of any other person duly authorised on his behalf with an approved intermediary for the purpose of lending under the scheme. (ii) Borrower is a person who borrows the securities .....

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..... ation for which a separate consideration is charged; Explanation.-For the removal of doubts, it is hereby clarified that the expression services includes facilitating or arranging transactions in securities; 4. Securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 are not covered in the definition of goods under section 2(52) and services under section .....

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..... erefore is not excluded from the definition of services. 4.3 The lender temporarily lends the securities held by him to a borrower and charges lending fee for the same from the borrower. The borrower of securities can further sell or buy these securities and is required to return the lended securities after stipulated period of time. The lending fee charged from the borrowers of securities has the .....

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..... er has already paid CGST / SGST / UTGST treating the supply as an intra-state supply, such lenders shall not be required to pay IGST again in lieu of such GST payments already made. 5.2 With effect from 1st October, 2019, the borrower of securities shall be liable to discharge GST as per Sl. No 16 of Notification No. 22/2019-Central Tax (Rate) dated 30.09.2019 under reverse charge mechanism (RCM). .....

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