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TMI BlogClarification regarding taxability of supply of securities under Securities Lending Scheme, 1997.X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 India. There is anonymity between the lender and bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 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 HGST 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 1 st October, 2019, the borrower of securities shall be liable to discharge GST as per serial number 16 of Haryana Government, Excise and Taxation Department, notification No.89/GST-2, dated 01.10.2019 under reverse charge mechanism (RCM). The nature of GST to be paid shall be IGST under RCM. 6. Difficulties faced, if any, in implementation of the above circular may please be brought ..... X X X X Extracts X X X X X X X X Extracts X X X X
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