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TMI BlogClarification on place of supply applicable for custodial services provided by banks to Foreign Portfolio Investors-regX X X X Extracts X X X X X X X X Extracts X X X X ..... ions have been received seeking clarification on the Place of Supply in cases of Custodial Services provided by Banks to Foreign Portfolio Investors (hereinafter referred to as FPIs ), as a view is being taken by some field formations that the Place of Supply in case of custodial service would be determined as per Section 13(8)(a) of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as IGST Act ), i.e. the location of the service provider (banks or financial institutions). 2. In order to clarify the issue and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168(1) of the Central Goods and Services Tax Act, 2017 (h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollective Investment Scheme in accordance with the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 ; (d) derivatives traded on a recognized stock exchange; (e) units of real estate investment trusts, infrastructure investment trusts and units of Category III Alternative Investment Funds registered with the Board; (f) Indian Depository Receipts; (g) any debt securities or other instruments as permitted by the Reserve Bank of India for foreign portfolio investors to invest in from time to time; and (h) such other instruments as specified by the Board from time to time. Various banks enter into custodial agreements with the Foreign Portfolio Investors (FPIs) for the provision of such custodial services. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts and NRO (non-resident ordinary) accounts will be covered under this rule. Question:5.9.3 What are the services that are provided by a banking company to an account holder (holder of an account bearing interest to the depositor)? Answer: Following are examples of services that are provided by a banking company or financial institution to an account holder , in the ordinary course of business :- i) services linked to or requiring opening and operation of bank accounts such as lending, deposits, safe deposit locker etc; ii) transfer of money including telegraphic transfer, mail transfer, electronic transfer etc . Question:5.9.4 What are the services that are not provided by a banking company or financial institution to an account hol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, 2012, the clarification given in the Education Guide under Service Tax Regime is equally applicable under GST Regime. Accordingly, it is clarified that the custodial services provided by banks or financial institutions to FPIs are not to be treated as services provided to 'account holder' and therefore, the said services are not covered under Section 13(8)(a) of the IGST Act . Therefore, the place of supply of such services is not to be determined under Section 13(8)(a) of the IGST Act but has to be determined under the default provision i.e., sub-section (2) of section 13 of the IGST Act . 2. It is requested that suitable trade notices may be issued to publicize the contents of this Circular. 3. Difficulty, if any, in implem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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