CBIC issues clarification regarding taxability of supply of securities under Securities Lending Scheme, 1997
Central Board of Indirect Taxes & Customs (CBIC) has issued Circular No. 119/38/2019-GST dated 11th October, 2019 to clarify regarding taxability of supply of securities under Securities Lending Scheme, 1997.
It has been clarified that, the supply of lending of securities under the Securities under Lending Scheme, 1997 is classifiable under heading 997119 and is leviable to GST@18%. For the past period i.e. from 01.07.2017 to 30.09.2019, GST is payable under forward charge by the lender on the lending fees charged by the lender from the borrower and request may be made by the lender (supplier) to SEBI to disclose the 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. CBIC has now clarified that the borrower of securities shall be liable to discharge GST (as per Sl. No 16 of Notification No. 22/2019-Central Tax (Rate) dated 30.09.2019) under reverse charge mechanism (RCM) with effect from 1st day of October, 2019. The nature of GST to be paid shall be IGST under RCM.
For more information please refer the attached Circular.