TMI BlogClarification regarding taxability of supply of securities under Securities Lending Scheme, 1997X X X X Extracts X X X X X X X X Extracts X X X X ..... ities 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 type or class at the end of the specified period along with the corporate benefits accruing on the securities borrowed. The transaction takes place through an electronic screen-based order matching mechanism provided by the recognised stock exchange in Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 2(102) of the JGST 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. includes facilitating or arranging transactions in securities is only clarificatory in nature and does not have any bearing on the taxability of the services under discussion (lending of securities) in past since 01.07.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nature of tax payable shall be IGST. However, if the service provider has already paid JGST / 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 01.11.2019 under reverse charge mechanism (RCM). The nature of GST to be paid shall be IGST under RCM. 6. Difficulty if any, in the implementation of this circular may be brought to the notice of the Board. (Prashant Kumar) Secretary-Cum-Commissioner, Commercial Taxes, Jharkhand, Ranchi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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