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TMI Blog2019 (8) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... rose since the payment was not made within the stipulated period of time by the client to the Stock Exchange for purchase of Securities. Since the service of buying and selling of securities which is exempted under GST, as per the definitions of 'goods' and 'services' under the Section 2(52) and 2(102) of CGST Act, 2017, the corresponding delayed payment charges which are also linked to the above service of trading of securities should also stand exempt under GST. Applicant is not liable to pay GST on the delayed payment charges on reimbursement of amount by client to Applicant, where client failed to pay amount paid to Stock Exchange for purchase of securities with T+1 (trading day plus one day) under SEBI Regulation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on exchange platform by virtue of being a recognized BSE/NSE appointed stock broker. 3. The Applicant submitted application for Advance Ruling dated 20-10-2018, with a issue :- Taxability on Delayed Payment Charges on reimbursement of amount by client to Applicant, where client failed to pay amount paid to Stock Exchanges for purchase of securities with T+1 (trading day plus one day) under SEBI Regulation norms and deducted by Stock Exchanges from Applicant Account being purchase consideration of securities which are neither goods nor service under GST. 4. Applicant was granted hearing on 13-12-2018, Mr. Prakhar Gupta C.A., Authorized representatives appeared for hearing. 5. After going through the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns/margin trading facilities are transactions which are in the nature of extending loans or advance and are covered by entry No. 27 of notification No. 12/2017-Centra1 Tax (Rate), dated 28 June, 2017. (Amended as on 27-12-2018) Reference is invited to the Entry No. 27 of Notification No. 12/2017-Central Tax (Rate), dated 28th June, 2017 which is regarding the exempted Service under GST Act. The relevant Para is being reproduced below herewith :- S. No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (Per cent.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms provided by stock exchange. Their contention has been that the said charges are not on the account of stock broking activity on which due tax liability is discharged, in fact it is on amount remaining unfulfilled (short paid) at the time of initial purchase of stock between stock broker and client within the stipulated time i.e., (T+1). His contentions have been since the transaction between him and his client is outside GST. Therefore, if the principal is out of GST there can be any tax levied on any further interest or delayed payment charge. He also invited reference towards FAQ No. 80, dated 26-12-2018 issued by C.B.I. C. which according to them specifically pertain to this matter. He also produced copy of the Advance Ruling in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Exchange (within T+1 i.e. trade day plus one day) as per SEBI regulations, stock exchange debits account of the Broker against said purchases. Falling which the business of brokers stands shut by stock exchange under its regulations by closing trading terminal of the stock broker. 10. Client reimburse said amount to broker with charge for delayed payment. In this case, any amount which is overdue from the client towards trading or on account of any other reason to the broker will be charged from the client at the rate of 18% P.A. 11. The nature of the delayed payment charges are being summarized below for understanding its taxability under the GST law :- Where The client makes delay (i.e. beyond T+ 1 stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the expression services includes facilitating or arranging transactions in securities;] the corresponding delayed payment charges which are also linked to the above service of trading of securities should also stand exempt under GST. 13. Another point raised by the Appellant is regarding the FAQ on the Banking, Insurance, Stock amended by the C.B.I C. on 27-12-2018, needs to be taken into consideration, which clarified that the GST shall not be applicable on delayed payment charges. (Q. 80) Is GST leviable on interest/delayed payment charges charged to clients for debit for settlement obligations/margin trading facility? (Ans) Any interest/ delayed payment charges charged for delay in payme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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