FAQs on Stock Broking Services under GST

FAQs on Stock Broking Services under GST

The CBIC has published the FAQs on different topics and sectors. Following are the FAQs on Stock broking Sector under GST:-  

1. In the case of stockbroking, whether stamp duty or securities transaction tax or other Central or State taxes would be considered as a part of the value of supply as prescribed under Section 15 of the CGST Act, 2017, for levy of GST?

Ans. GST is not payable by the stockbrokers on these recoveries as long as the conditions of the pure agent as provided in Rule 33 of the CGST Rules, 2017 are met. If not, the valuation will be done as per section 15 of the CGST Act, 2017 read with Rule 27 of CGST Rules, 2017.

2. Is brokerage earned in stockbroking service liable to Goods and Services Tax?

Ans. Yes. Since the stock brokers are engaged in the business of supplying the stockbroking service, appropriate GST is payable on the same.

3. Can a person take voluntary registration under the Act?

Ans. Section 25(3) of the CGST Act, 2017 states that “a person, though not liable to be registered under section 22 or section 24 of the CGST Act, 2017 may get himself registered voluntarily, and all provisions of this Act, as are applicable to a registered person, shall apply to such person.” Therefore, any person may choose to get voluntary registration under the Act.

4. 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 payment of brokerage amount/settlement obligations/margin trading facility shall be leviable to GST.

5. What will be the “place of supply of services” in case of stockbrokers?

Ans. In case of stockbroking, the details of the address of the client are required to be updated with the Stock Exchange as part of the “Unique Client Code” details. Therefore, in case of domestic supplies of such services, address on record with the stockbrokers shall be the “location of the recipient of services” in terms of section 12(12) of the IGST Act, 2017. However, in cases where the location of the recipient is outside India, the place of supply shall be determined as per section 13(8) of the IGST Act, 2017 i.e. as an intermediary.

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