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2018 (12) TMI 1862 - AAR - GSTTaxability - delayed payment charges on reimbursement of amount by client to Applicant - payment made by them beyond the time stipulated by the stock exchange and SEBI and for which payment is deducted by the stock exchange from the applicant s account - HELD THAT - The delayed payment charges squarely get covered under GST for the purpose of taxation. The applicant is regularly providing services of trading of securities on behalf of customers which is a supply of service on which the applicant is admittedly paying GST. Delayed payment charges are also linked to the above services of Trading of securities on behalf of customers and GST on the same shall be payable in view of Section 15(2)(d) of CGST Act 2017 and the UPGST Act 2017. Thus Applicant is liable to pay GST on the delayed payment of charges which are overdue from the client towards trading of securities and reimbursed to them.
Issues:
Taxability of delayed payment charges on reimbursement of amount by client to the applicant. Analysis: The applicant, a registered GST assessee engaged in stock broking services, sought an advance ruling on the taxability of delayed payment charges on client reimbursements for securities trading. The applicant's query pertained to whether GST is applicable on such charges recovered from clients for delayed payments beyond the stipulated time by stock exchanges and SEBI. The Authority examined the applicant's submission and found that delayed payment charges are linked to the service of trading securities on behalf of customers, which is subject to GST. The Authority referenced Section 15(2)(d) of the CGST Act, 2017, which includes late fees for delayed payments in the value of supply for services. Consequently, the Authority unanimously ruled that the applicant is liable to pay GST on delayed payment charges overdue from clients for trading securities and reimbursed to them. This judgment clarifies the tax treatment of delayed payment charges in the context of stock broking services under GST regulations. The ruling emphasizes that such charges are considered part of the value of supply for services provided, as per the provisions of the CGST Act, 2017. By categorizing delayed payment charges as incidental expenses linked to the service of trading securities on behalf of customers, the Authority establishes the tax liability of the applicant for GST on these charges. The ruling provides a clear interpretation of the relevant legal provisions and underscores the applicability of GST on delayed payment charges in the specified scenario. In conclusion, the advance ruling by the Authority for Advance Rulings, Uttar Pradesh, decisively addresses the issue of taxability concerning delayed payment charges in the context of stock broking services under GST. The ruling affirms that such charges are subject to GST as they form part of the value of supply for services provided by the applicant. By citing specific provisions of the CGST Act, 2017, the Authority establishes the legal basis for imposing GST on delayed payment charges related to trading securities. This judgment provides clarity on the tax treatment of such charges and sets a precedent for similar cases in the realm of GST compliance for stock broking services.
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