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Clarification by CBIC on whether interest to be charged on Gross Tax Liability or Net Tax Liability?

    

Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 117(1A) in certain cases

    

Budget 2020 : Highlights

    

Due date of GSTR-9 and GSTR-9C for FY 2017-18 - Extension

    

GSTR-3B NEW DUE DATES

    

Now the GST Taxpayers can file their GSTR-3B Returns in a Staggered Manner

    

Tax Audit due date extension AY 2019-20

    

GST Council 37th Meeting Update

    

Corporate tax rates slashed to 22% for domestic companies and 15% for new domestic manufacturing companies and other fiscal reliefs

    

Fake Input and refund of IGST on exports - crackdown by DGGI and DRI

    

GST Council may Scrap GSTR-9 and GSTR-9C for FY 17-18 for small taxpayers upto 5 crore turnover

    

Changes in 36th GST Council Meeting held on 27th July 2019

    

CMP-08 due date for quarter April 2019 to June 2019 extended till 31st July 2019

    

Press Release restricting the last date for availing ITC for FY 2017-18 is illegal : Gujarat High Court

    

Budget 2019 Highlights - 05 July 2019

    

Transfer of GST amount from one head to other head (Form GST PMT - 09)

    

DGGST arrests one person for availing and passing fake ITC of Rs.16 Crore.

    

Notification issued to extend the date of blocking and unblocking on e-way bill facility to 21.08.2019.

    

Press Release of 35th GST Council Meeting held on 21st June 2019

    

Issues reported in filing Form GSTR 9C by the taxpayers : Advisory by Team GSTN

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S.No. Document_Date Category, No. & Dated Subject / Title PDF Document History / More details Add to Favorites
61 14-11-2019

Notification No. 52/2019 dated 14-11-2019 - Central Tax

Seeks to extend the due date for furnishing FORM GSTR-1 for registered persons in Jammu and Kashmir having aggregate turnover of up to 1.5 crore rupees for the quarter July, 2019 to September, 2019

[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)] Government of India Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes and Customs Notification No. 52/2019 – Central Tax New Delhi, the 14th November, 2019 G.S.R.....(E).–In exercise of the powers conferred by section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017) (hereafter in this notification referred to as the said Act), the Central Government, on the recommendations of the Council, hereby makes the following amendment in notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 27/2019 – Central Tax, dated the 28th June, 2019, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 453 (E), dated the 28th June, 2019, namely:– In the said notification, in the second paragraph, the following proviso shall be inserted, namely: – “Provided that for registered persons whose principal place of business is in the State of Jammu and Kashmir, shall furnish the details of outward supply of goods or services or both in FORM GSTR-1 under the Central Goods and Services Tax Rules, 2017 effected during the quarter July-September, 2019 till 30th November, 2019.”. 2. This notification shall be deemed to come into force with effect from the 31st day of October, 2019. [F. No. 20/06/08/2019-GST] (Ruchi Bisht) Under Secretary to the Government of India Note: The principal notification No. 27/2019 – Central Tax, dated the 28th June, 2019 was published in the Gazette of India, Extraordinary, vide number G.S.R. 453 (E), dated the 28th June, 2019. [To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)] Government of India Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes and Customs

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GSTR-1 - FORM

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62 11-11-2019

Circular No. 123/2019 dated 11-11-2019 - Central Tax

Seeks to clarify restrictions in availment of input tax credit in terms of sub-rule (4) of rule 36 of CGST Rules, 2017.

Circular No. 123/42/2019– GST Page 1 of 4 F. No. CBEC – 20/06/14/2019 – GST Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes and Customs GST Policy Wing ****** New Delhi, the 11th November, 2019 To The Pr. Chief Commissioners / Chief Commissioners / Principal Commissioners / Commissioners of Central Tax (All), The Principal Director Generals / Director Generals (All) Madam / Sir, Subject: Restriction in availment of input tax credit in terms of sub-rule (4) of rule 36 of CGST Rules, 2017 – reg. Sub-rule (4) to rule 36 of the Central Goods and Services Tax Rules, 2017 (hereinafter referred to as the CGST Rules) has been inserted vide notification No. 49/2019- Central Tax, dated 09.10.2019. The said sub-rule provides restriction in availment of input tax credit (ITC) in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act). 2. To ensure uniformity in the implementation of the provisions of the law across the field formations, the Board, in exercise of its powers conferred under section 168(1) of the CGST Act hereby clarifies various issues in succeeding paragraphs. 3. The conditions and eligibility for the ITC that may be availed by the recipient shall continue to be governed as per the provisions of Chapter V of the CGST Act and the rules made thereunder. This being a new provision, the restriction is not imposed through the common portal and it is the responsibility of the taxpayer that credit is availed in terms of the said rule and therefore, the availment of restricted credit in terms of sub-rule (4) of rule 36 of CGST Rules shall be done on self-assessment basis by the tax payers. Various issues relating to implementation of the said sub-rule have been examined and the clarification on each of these points is as under: - Sl. No Issue Clarification 1. What are the invoices The restriction of availment of ITC is imposed only in respect Circular No. 123/42/2019– GST Page 2 of 4 / debit notes on which the restriction under rule 36(4) of the CGST Rules shall apply? of those invoices / debit notes, details of which are required to be uploaded by the suppliers under sub-section (1) of section 37 and which have not been uploaded. Therefore, taxpayers may avail full ITC in respect of IGST paid on import, documents issued under RCM, credit received from ISD etc. which are outside the ambit of sub-section (1) of section 37, provided that eligibility conditions for availment of ITC are met in respect of the same. The restriction of 36(4) will be applicable only on the invoices / debit notes on which credit is availed after 09.10.2019. 2. Whether the said restriction is to be calculated supplier wise or on consolidated basis? The restriction imposed is not supplier wise. The credit available under sub-rule (4) of rule 36 is linked to total eligible credit from all suppliers against all supplies whose details have been uploaded by the suppliers. Further, the calculation would be based on only those invoices which are otherwise eligible for ITC. Accordingly, those invoices on which ITC is not available under any of the provision (say under sub-section (5) of section 17) would not be considered for calculating 20 per cent. of the eligible credit available. 3. FORM GSTR-2A being a dynamic document, what would be the amount of input tax credit that is admissible to the taxpayers for a particular tax period in respect of invoices / debit notes whose details have not been uploaded by the suppliers? The amount of input tax credit in respect of the invoices / debit notes whose details have not been uploaded by the suppliers shall not exceed 20% of the eligible input tax credit available to the recipient in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub- section (1) of section 37 as on the due date of filing of the returns in FORM GSTR-1 of the suppliers for the said tax period. The taxpayer may have to ascertain the same from his auto populated FORM GSTR 2A as available on the due date of filing of FORM GSTR-1 under sub-section (1) of section 37. 4. How much ITC a registered tax payer can avail in his FORM GSTR-3B in a month in case the details of some of the invoices have not been uploaded by the suppliers under subsection (1) of section 37. Sub-rule (4) of rule 36 prescribes that the ITC to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under subsection (1) of section 37, shall not exceed 20 per cent. of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under subsection (1) of section 37. The eligible ITC that can be availed is explained by way of illustrations, in a tabulated form, below. In the illustrations, say a taxpayer “R” receives 100 invoices (for inward supply of goods or services) involving ITC of Rs. Circular No. 123/42/2019– GST Page 3 of 4 10 lakhs, from various suppliers during the month of Oct, 2019 and has to claim ITC in his FORM GSTR-3B of October, to be filed by 20th Nov, 2019. Details of 20% of Eligible ITC to be suppliers’ eligible credit taken in GSTRinvoices which for where invoices are 3B to be filed by 20th Nov. recipient is uploaded eligible to take ITC Case Suppliers have Rs.1,20,000/- Rs. 6,00,000 (i.e. 1 furnished in amount of eligible FORM ITC available, as GSTR-1 80 per details invoices uploaded by the involving ITC suppliers) + of Rs. 6 lakhs Rs.1,20,000 (i.e. as on the due 20% of amount of date of eligible ITC furnishing of available, as per the details of details uploaded outward by the suppliers) = supplies by the Rs. 7,20,000/- suppliers. Case Suppliers have Rs. 1,40,000/- Rs 7,00,000 + Rs. 2 furnished in 1,40,000 = Rs. FORM 8,40,000/- GSTR-1 80 invoices involving ITC of Rs. 7 lakhs as on the due date of furnishing of the details of outward supplies by the suppliers. Case Suppliers have Rs. 1,70,000/- Rs. 8,50,000/- + 3 furnished in Rs.1,50,000/-* = FORM Rs. 10,00,000 GSTR-1 75 invoices * The additional Circular No. 123/42/2019– GST Page 4 of 4 having ITC of Rs. 8.5 lakhs as on the due date of furnishing of the details of outward supplies by the suppliers. amount of ITC availed shall be limited to ensure that the total ITC availed does not exceed the total eligible ITC. 5. When can balance ITC be claimed in case availment of ITC is restricted as per the provisions of rule 36(4)? The balance ITC may be claimed by the taxpayer in any of the succeeding months provided details of requisite invoices are uploaded by the suppliers. He can claim proportionate ITC as and when details of some invoices are uploaded by the suppliers provided that credit on invoices, the details of which are not uploaded (under sub-section (1) of section 37) remains under 20 per cent of the eligible input tax credit, the details of which are uploaded by the suppliers. Full ITC of balance amount may be availed, in present illustration by “R”, in case total ITC pertaining to invoices the details of which have been uploaded reaches Rs. 8.3 lakhs (Rs 10 lakhs /1.20). In other words, taxpayer may avail full ITC in respect of a tax period, as and when the invoices are uploaded by the suppliers to the extent Eligible ITC/ 1.2. The same is explained for Case No. 1 and 2 of the illustrations provided at Sl. No. 4 above as under: Case 1 “R” may avail balance ITC of Rs. 2.8 lakhs in case suppliers upload details of some of the invoices for the tax period involving ITC of Rs. 2.3 lakhs out of invoices involving ITC of Rs. 4 lakhs details of which had not been uploaded by the suppliers. [Rs. 6 lakhs + Rs. 2.3 lakhs = Rs. 8.3 lakhs] Case 2 “R” may avail balance ITC of Rs. 1.6 lakhs in case suppliers upload details of some of the invoices involving ITC of Rs. 1.3 lakhs out of outstanding invoices involving Rs. 3 lakhs. [Rs. 7 lakhs + Rs. 1.3 lakhs = Rs. 8.3 lakhs] 4. It is requested that suitable trade notices may be issued to publicize the contents of this Circular. Hindi version will follow. (Yogendra Garg) Principal Commissioner (GST)

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GSTR-3B - FORM

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GSTR-1 - FORM

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Section 37 - CGSTACT

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Section 168 - CGSTACT

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Section 17 - CGSTACT

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Rule 36 - CGSTRULES

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GSTR-2A - FORM

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63 05-11-2019

Circular No. 122/2019 dated 05-11-2019 - Central Tax

Generation and quoting of Document Identification Number (DIN) on any communication issued by the officers of the Central Board of Indirect Taxes and Customs (CBIC) to tax payers and other concerned persons- reg.

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Section 168 - CGSTACT

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64 31-10-2019

Notification No. 51/2019 dated 31-10-2019 - Central Tax

Seeks to amend notification no. 2/2017- Central Tax in order to notify jurisdiction of Jammu Commissionerate over UT of J&K and UT of Ladakh

[To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)] Government of India Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes and Customs Notification No. 51/2019 – Central Tax New Delhi, the 31st October, 2019 G.S.R......(E). - In exercise of the powers under section 3 read with section 5 of the Central Goods and Services Tax Act, 2017 (12 of 2017) and section 3 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), the Government hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 02/2017- Central Tax, dated the 19th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 609(E), dated the 19th June, 2017, namely:– In the said notification, in Table II, in column (3), in serial number 51, for the words “State of Jammu and Kashmir”, the words “Union territory of Jammu and Kashmir and Union territory of Ladakh” shall be substituted. [F. No. 20/06/17/2018 -GST(Pt.I)] (Ruchi Bisht) Under Secretary to the Government of India Note: - The principal notification No. 02/2017-Central Tax, dated the 19th June, 2017 was published in the Gazette of India, Extraordinary, vide number G.S.R. 609(E), dated the 19th June, 2017 and was last amended by notification No. 04/2019-Central Tax, dated the 29th January, 2019, published in the Gazette of India, Extraordinary, vide number G.S.R. 64(E), dated the 29th January, 2019.

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65 24-10-2019

Press Release No. 37 dated 24-10-2019 - Other

EXAMINATION FOR CONFIRMATION OF ENROLLMENT OF GST PRACTITIONERS.

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Rule 83 - CGSTRULES

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66 24-10-2019

Notification No. 50/2019 dated 24-10-2019 - Central Tax

Seeks to extend the last date for filing of FORM GST CMP-08 for the quarter July-September 2019 by four days from 18.10.2019 till 22.10.2019.

To be published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i)] Government of India Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes and Customs Notification No. 50/2019 – Central Tax New Delhi, the 24th October, 2019 G.S.R......(E). - In exercise of the powers conferred by section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby makes the following further amendment in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 21/2019- Central Tax, dated the 23rd April, 2019, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 322(E), dated the 23rd April, 2019, namely:– In the said notification, in paragraph 2, after the first proviso, the following proviso shall be inserted, namely: – “Provided further that the due date for furnishing the statement containing the details of payment of self-assessed tax in said FORM GST CMP-08, for the quarter July, 2019 to September, 2019, or part thereof, shall be the 22nd day of October, 2019.”. 2. This notification shall be deemed to have come into force with effect from the 18th day of October, 2019. [F. No. 20/06/07/2019-GST] (Ruchi Bisht) Under Secretary to the Government of India Note: - The principal notification No. 21/2019-Central Tax, dated the 23rd April, 2019 was published in the Gazette of India, Extraordinary, vide number G.S.R. 322(E), dated the 23rd April, 2019 and was last amended by notification No. 35/2019-Central Tax, dated the 29th July, 2019, published in the Gazette of India, Extraordinary, vide number G.S.R. 534(E), dated the 29th July, 2019.

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GST CMP-08 - FORM

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67 11-10-2019

Circular No. 121/2019 dated 11-10-2019 - Central Tax

Clarification related to supply of grant of alcoholic liquor license.

Circular No. 121/40/2019-GST F. No. 354/136/2019-TRU Government of India Ministry of Finance Department of Revenue Tax research Unit **** North Block, New Delhi, Dated the 11th October, 2019 To, The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioner of Central Tax (All) / The Principal Director Generals/ Director Generals (All) Madam/Sir, Subject– GST on license fee charged by the States for grant of Liquor licences to vendorsreg. Services proved by the Government to business entities including by way of grant of privileges, licences, mining rights, natural resources such as spectrum etc. against payment of consideration in the form of fee, royalty etc. are taxable under GST. Same was the position under Service Tax regime also with effect from 1st April, 2016. Tax is required to be paid by the business entities on such services under reverse charge. 2. GST Council in its 26th meeting held on 10.03.2018, recommended that GST was not leviable on license fee and application fee, by whatever name it is called, payable for alcoholic liquor for human consumption and that this would apply mutatis mutandis to the demand raised by Service Tax/Excise authorities on license fee for alcoholic liquor for human consumption in the pre-GST era, i.e. for the period from 01-04-2016 to 30-06-2017. 3. Grant of liquor licences by State Government against payment of consideration in the form of licence fee, application fee etc. was a taxable service under Service Tax, therefore to implement GST Council’s recommendation, Central Government decided to exempt service provided or agreed to be provided by way of grant of liquor licence by the State Government, against consideration in the form of licence fee or application fee, by whatever name called, during the period from 01.04.2016 to 30.06.2017. Clause No. 117 of Finance (No. 2) Act, 2019 may be referred in this regard. 4. GST Council in its 37th meeting held on 20.09.2019 further recommended that the decision of the 26th GST Council meeting be implemented by notifying service by way of grant of alcoholic liquor licence, against consideration in the form of licence fee or application fee or Circular No. 121/40/2019-GST by whatever name it is called, by State Government as neither a supply of goods nor a supply of service. Therefore, in exercise of powers conferred under sub-section 2 (b) of section 7 of CGST Act, 2017, Notification No. 25/2019-Central Tax (Rate) dated 30th September, 2019 has been issued. 5. GST Council further decided in the 37th meeting held on 20.09.2019, to clarify that this special dispensation applies only to supply of service by way of grant of liquor licenses by the State Governments as an agreement between the Centre and States and has no applicability or precedence value in relation to grant of other licenses and privileges for a fee in other situations, where GST is payable. 6. Difficulty if any, in the implementation of this Circular may be brought to the notice of the Board. Yours Faithfully, (Shashikant Mehta) OSD, TRU Email: shashikant.mehta@gov.in Tel: 011 2309 5547

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Section 7 - CGSTACT

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68 11-10-2019

Circular No. 120/2019 dated 11-10-2019 - Central Tax

Clarification on the effective date of explanation inserted in notification No. 11/2017- CTR dated 28.06.2017, Sr. No. 3(vi).

Circular No. 120/39/2019- GST 1 F. No. 354/136/2019-TRU Government of India Ministry of Finance Department of Revenue (Tax research Unit) ***** Room No. 146G, North Block, New Delhi, the 11th October 2019 To, The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioner of Central Tax (All) / The Principal Director Generals/ Director Generals (All) Madam/Sir, Subject: Clarification on the effective date of explanation inserted in notification No. 11/2017- CTR dated 28.06.2017, Sr. No. 3(vi) – reg. Representations have been received to amend the effective date of notification No. 17/2018-CTR dated 26.07.2018 whereby explanation was inserted in notification No. 11/2017- CTR dated 28.06.2017, Sr. No. 3(vi) to the effect that for the purpose of the said entry, the activities or transactions under taken by Government and Local Authority are excluded from the term ‘business’. 2. The matter has been examined. Section 11(3) of CGST Act provides that the Government may insert an explanation in any notification issued under section 11, for the purpose of clarifying its scope or applicability, at any time within one year of issue of the notification and every such explanation shall have effect as if it had always been the part of the first such notification. 3. As recommended by GST Council, the explanation in question was inserted vide notification No. 17/2018-CTR dated 26.07.2018 in exercise of powers under section 11(3) within one year of the insertion of the original entry prescribing concessional rate, so that it would have effect from the date of inception of the entry i.e. 21.09.2017. However, like other notifications issued on 26.07.2018 to give effect to other recommendations of the GST Council, the said notification also contained a line in the last paragraph that the notification shall come into effect from 27.07.2018. 4. It is hereby clarified that the explanation having been inserted under section 11(3) of the CGST Act, is effective from the inception of the entry at Sl. No. 3(vi) of the notification No. 11/2017- CTR dated 28.06.2017, that is 21.09. 2017. The line in notification No. 17/2018-CTR Circular No. 120/39/2019- GST 2 dated 26.07.2018 which states that the notification shall come into effect from 27.07.2017 does not alter the operation of the notification in terms of Section 11(3) as explained in para 3 above. 5. Difficulty, if any, in implementation of this circular may be brought to the notice of the Board. Yours Faithfully, Shashikant Mehta OSD (TRU) E-mail: shashikant.mehta@gov.in Tel: 011-23095547

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Section 11 - CGSTACT

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69 11-10-2019

Circular No. 119/2019 dated 11-10-2019 - Central Tax

Clarification regarding taxability of supply of securities under Securities Lending Scheme, 1997.

Circular No. 119/38/2019-GST 1 F. No. 354/136/2019-TRU Government of India Ministry of Finance Department of Revenue Tax research Unit **** Room No. 156, North Block, New Delhi, the 11th October 2019 To, The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioner of Central Tax (All) / The Principal Director Generals/ Director Generals (All) Madam/Sir, Subject: Clarification regarding taxability of supply of securities under Securities Lending Scheme, 1997 – reg. Trade has requested clarification on whether the supply of securities under Securities Lending Scheme, 1997 (“Scheme”) 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 borrower since there is no direct agreement between them. 2.1 The lenders earn lending fee for lending their securities to the borrowers. The security lending mechanism is depicted in the diagram below: - 2.2 In the above chart: (i) Lender is a person who deposits the securities registered in his name or in the name of any other person duly authorised on his behalf with an approved intermediary for the purpose of lending under the scheme. Securities Securities Circular No. 119/38/2019-GST 2 (ii) Borrower is a person who borrows the securities under the scheme through an approved intermediary. (iii) Approved intermediary is a person duly registered by the SEBI under the guidelines/scheme through whom the lender will deposit the securities for lending and the borrower will borrow the securities; 3. It may be noted for the purpose of GST Act, “securities” shall have the same meaning as assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 [Section 2(101) of CGST Act]. The definition of services as per Section 2(102) of the CGST Act, is extracted as below: - “services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; Explanation.––For the removal of doubts, it is hereby clarified that the expression “services” includes facilitating or arranging transactions in securities; 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 CGST 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 01.07.2017 but relates to facilitating or arranging transactions in securities. 4.2 The activity of lending of securities is not a transaction in securities as it does not involve disposal of securities. The clause 4 of para 4 relating to the Scheme under the Securities Lending Scheme, 1997 doesn’t treat lending of securities as disposal of securities and therefore is not excluded from the definition of services. 4.3 The lender temporarily lends the securities held by him to a borrower and charges lending fee for the same from the borrower. The borrower of securities can further sell or buy these securities and is required to return the lended securities after stipulated period of time. The lending fee charged from the borrowers of securities has the character of consideration and this activity is taxable in GST since 01.07.2017. 4.4 Apart from above, the activities of the intermediaries facilitating lending and borrowing of securities for commission or fee are also taxable separately. 5 The supply of lending of securities under the scheme is classifiable under heading 997119 and is leviable to GST@18% under Sl. No. 15(vii) of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017 as amended from time to time. Circular No. 119/38/2019-GST 3 5.1 For the past period i.e. from 01.07.2017 to 30.09.2019, GST is payable under forward charge by the lender 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. 5.2 With effect from 1st October, 2019, 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). The nature of GST to be paid shall be IGST under RCM. 6. Difficulty if any, in the implementation of this circular may be brought to the notice of the Board. Yours Faithfully, (Harish Y N) OSD, TRU Email: harish.yn@gov.in Tel: 011 2309 5547

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Section 2(101) - CGSTACT

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Section 2(102) - CGSTACT

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Section 2(52) - CGSTACT

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70 11-10-2019

Circular No. 118/2019 dated 11-10-2019 - Central Tax

Clarification regarding determination of place of supply in case of software/design services related to Electronics Semi-conductor and Design Manufacturing (ESDM) industry.

Circular No. 118/37/2019-GST 1 F. No. 354/136/2019-TRU Government of India Ministry of Finance Department of Revenue Tax research Unit **** Room No. 156, North Block, New Delhi, the 11th October 2019 To, The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioner of Central Tax (All) / The Principal Director Generals/ Director Generals (All) Madam/Sir, Subject: Clarification regarding determination of place of supply in case of software/design services related to Electronics Semi-conductor and Design Manufacturing (ESDM) industry – reg. Various representations have been received from trade and industry seeking clarification on determination of place of supply in case of supply of software/design services by a supplier located in taxable territory to a service recipient located in nontaxable territory by using the sample hardware kits provided by the service recipient. 2. It is stated that a number of companies that are part of the growing Electronics Semiconductor and Design Manufacturing (ESDM) industry in India are engaged in the process of developing software and designing integrated circuits electronically for customers located overseas. The client/customer electronically provides Indian development and design companies with design requirements and Intellectual Property blocks (“IP blocks”, reusable units of software logic and design layouts that can be combined to form newer designs). Based on these, the Indian company digitally integrates the various IP blocks to develop the software and the silicon or hardware design. These designs are communicated abroad (in industry standard electronic formats) either to the customer or (on behest of the customer) a manufacturing facility for the manufacture of hardware based on such designs. 2.1 In addition, the software developed is also integrated upon or customized to this hardware. On some occasions, samples of such prototype hardware are then provided back to the Indian development and design companies to test and validate the software and design that has been developed to ensure that it is error free. 2.2 The trade has requested clarification on whether provision of hardware prototypes and samples and testing thereon lends these services the character of performance-based services in respect of “goods required to be made physically available by the recipient to the provider”. Circular No. 118/37/2019-GST 2 3. The provisions relating to determination of place of supply as contained in the Integrated Goods & Services Tax Act, 2017 (hereinafter referred to as “the IGST Act”) have been examined. In order to ensure uniformity in the implementation of the provisions of the law, the Board, in exercise of its powers conferred by sub-section (1) of section 168 of the Central Goods & Services Tax Act, 2017 (hereinafter referred to as “the CGST Act”) clarifies the same as below. 4. In contracts where service provider is involved in a composite supply of software development and design for integrated circuits electronically, testing of software on sample prototype hardware is often an ancillary supply, whereas, chip design/software development is the principal supply of the service provider. The service provider is not involved in software testing alone as a separate service. The testing of software/design is aimed at improving the quality of software/design and is an ancillary activity. The entire activity needs to be viewed as one supply and accordingly treated for the purposes of taxation. Artificial vivisection of the contract of a composite supply is not provided in law. These cases are fact based and each case should be examined for the nature of supply contracted. 4.1 Therefore, it is clarified that the place of supply of software/design by supplier located in taxable territory to service recipient located in non-taxable territory by using sample prototype hardware / test kits in a composite supply, where such testing is an ancillary supply, is the location of the service recipient as per Section 13(2) of the IGST Act. Provisions of Section 13(3)(a) of IGST Act do not apply separately for determining the place of supply for ancillary supply in such cases. 5. Difficulty if any, in the implementation of this circular may be brought to the notice of the Board. Yours Faithfully, (Harish Y N) OSD, TRU-II Email: harish.yn@gov.in Tel: 011 2309 5547

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Section 168 - CGSTACT

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Section 13(2) - IGSTACT

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Section 13(3)(a) - IGSTACT

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