GSTTaxation

GST Registration for Every Share Trader

Once a business has GST registered, it must charge GST on all goods and services it sells. Manufacturers, merchants, and service providers are all affected. But is GST also applicable to stock traders?

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The subject of whether GST applies to securities dealing is one that many traders are perplexed about. Is income from stock, stock options, mutual funds, futures, and options trading exempt from GST? Let’s take a closer look and find out.

Share Trading and GST Registration Obligation

Securities are notably excluded from the scope of goods under the GST Act. Section 2(52) defines goods as any moveable item other than money and securities. Anything that isn’t products, money, or securities is classified as a service. As a result, dealing in stocks and securities is not deemed a supply under the GST Act and is therefore exempt from the tax. As a result, securities traders are exempt from GST registration.

It should be emphasised, however, that if a broker earns brokerage revenue from securities trading, he or she must register for GST if the brokerage exceeds the threshold limit.

Does Aggregate Turnover Include Trading Income?

If you are a firm dealing with both goods or services and share trading, you must be wondering whether you must compute your trading income while calculating aggregate turnover for the sake of the GST threshold level. The simple answer is no.

This is because trading turnover is the turnover determined for each trading segment in accordance with the Income Tax Act’s reporting requirements. The total amount of money spent on products and services is known as aggregate turnover. Because securities are not included in the scope of goods and services, the aggregate turnover should not include trading turnover when determining the application of GST registration.

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Share Trading and GST Levy

CGST, SGST, or IGST are all taxes that must be paid while trading securities. This is the GST paid by the trader on charges like as brokerage, transaction costs, and turnover fees, among other things. The trader can deduct such charges from his or her trading profit or loss when completing his or her income tax return on the IRS website.

However, since settlement obligations/margin trading facilities are transactions that are in the nature of extending loans or advances and are covered by entry No. 27 of notification No.12/2017- Central Tax (Rate) dated 28th June 2017, any interest/delayed payment charges charged for delay in payment of brokerage amount/ settlement obligations/ margin trading facility shall not be leviable to GST.

Frequently Asked Questions

1. Do stockbrokers fall within section 2(13) of the IGST Act, 2017's definition of ‘intermediary’?

Yes, indeed. Stockbrokers would be covered under the term 'intermediary' since they arrange the supply of securities between two or more people.

2. In the case of stockbrokers, where will the ‘place of supply of services’ be?

In the event of domestic deliveries of such services, the location of the beneficiary of services as defined by section 12(12) of the IGST Act, 2017 shall be the address on record with the stockbrokers. However, in circumstances where the beneficiary is located outside of India, the place of supply is determined as an intermediate under section 13(8) of the IGST Act, 2017.

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