ITC reversal on securities being derivates, Goods and Services Tax - GST

[Sonali Watve]

Trading income earned on derivates i.e. options and futures would be exempt income for purpose of computing reversal under Rule 42 of CGST Rules. Explanation in CGST Rules provides that for sale of securities, value of exempt supply would 1% of sale value. How should the value of supply be calculated for options and futures transactions?

Posts / Replies

[Shilpi Jain]

1% of the sale value can be regarded. Any challenge with this?

Further, whether there is any other exempt supply that you are having or this is the only one?

In such a scenario there is a possible interpretation that there is no requirement of reversal of credit.

[Aditya Gondiker]

Shilpiji,

Can you please elaborate on your response as to why the registered person would not be required to reverse credit if he only had exempted supplies in relation to transaction in securities and no other exempted supplies.

Thank you in advance.