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

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..... xcise, Incharge Distt. Kinnour, H.P. Dated Shimla-9 the 31st Oct., 2019. Madam/Sir, Subject: Clarification regarding taxability of supply of securities under Securities Lending Scheme, 1997 - reg. Various doubts have arisen whether the supply of securities under Securities Lending Scheme, 1997 ("Scheme") by the lender is taxable under GST. 2. Securities and Exchange Board of India (SEBI) has prescribed the Securities Lending Scheme, 1997 for the purpose of facilitating lending and borrowing of securities. Under the Scheme, lender of securities lends to a borrower through an approved intermediary to a borrower under an agreement for a specified period with the condition that the borrower will return equivalent securities of the same typ .....

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..... ion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination 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 insecurities; 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 2(102) of the HPGST Act. Therefore, a transaction in securities which involves disposal of securities is not a supply in GST and hence not taxable. 4.1 The explanation added to the definition of services w.e.f. 01.02.2019 i.e." incl .....

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..... 9.2019, GST is payable under forward charge by the lender and request may be made by the lender (supplier) to SEBI to disclose the information about borrower for discharging GST under forward charge. The nature of tax payable shall be IGST. However, if the service provider 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-State Tax (Rate) dated 30.09.2019 under reverse charge mechanism (RCM). The nature of GST to be paid shall be IGST under RCM. 6. This circular shall c .....

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