CHAPTER - 4 REVERSE CHARGE & ECO Normally under GST supplier of Goods or services is liable to pay Tax to the Government and he recover such tax from the recipient of goods and services, It is called as normal charge. In some cases (notified by the Government under sec 9(3)/ 9(4)/ 9(5)) Payment of GST to the Government is not by supplier but by recipient of goods or services (Reverse Charge) or any other person as notified. Sir, What is reverse charge and whether it cast extra liability of Tax on recipient? Beta, reverse charge means tax is payable to the Government directly by recipient of goods of services. It is important to note that GST being an indirect tax, burden of the tax has to be passed on to the recipient. Normally supplier pay the GST to the Govt. and pass on the burden to the recipient. Under reverse charge also, the burden to pay GST is on the recipient where recipient directly pay the tax to the Govt. on his inward supply of goods or services and supplier don't pay and charged the tox to the recipient. However, the compliance requirements, i.e, to obtain registration under GST, deposit tax, fling returns with the Government, etc. has been shifted from supplier to recipient. Hence, there is no extra burden of GST on the recipient, only compliance requirement get increased, V'Smart Academy wwwysmartacademy.com CA Vishal Bhattad (09850850800 BiINDEX Sec 2 | Important definitions | Pg. No. Para __| Important definitions| Pg. No. 2(105) | Supplier 75 Para 2(zzd)| Senior Advocate 80 293) | Recipient 15 Para 2(b)_| Advocate 80 2(98) _| Reverse Charge 75 Para 2(n) | Business Entity 80 2(107) | Taxable Person 15 2(7)__| Agriculturist 18 Note : Some reference for definition under 2(94) [Registered Person 75 reverse charge is taken from notification 2145) [E-Commerce Operator aa 12/2017 which is related to exemptions Sec 9(3) | Reverse Charge in| 1 | Notified Goods NIN 4/2017 | NIN 10/2017 | NIN 13/2017 notified cases. | 2| Notified Services NIN 13/2017 | NIN 4/2017 | NIN 4/2017 Sec 9(4) | Reverse Charge in | , case of supply by Unregistered to Registered 2 NIN 38/2017 | NIN 32/2017 | NIN 38/2017 Dated 13.02.2017 | Dated 130.2017 | One 13.02.2017 3 NIN 10/2018 | NIN 11/2018 | NIN 10/2018 Dated 23M 2016 | te 28 Mar 2018 | One 23M 2006 4 NIN 22/2018 | NIN 23/2018 | NIN 22/2018 aes 08 Aun 2018 | Det 06 Am 2018 | Oe Au, 208 Sec 9(5) | Electronic 1| Notified Services NIN 17/2017 NIN 14/2017 _ NIN 10/2018 Commerce NIN 23/2017 Ostet 28 ure. 218 Deed 28 ne 208 NIN 23/2017 NIN 23/2017 Operator i 2 2018 On 2018 EE CAVishal Bhattad (09850850800 wrwwivsmartacademy.com V’Smart AcademySir, Who is liable to pay GST? SAT na aas Nirzs As per Sec ()(a) of CGST Act (Sec S(I)(a) of IGST Act) Gst is payable by taxable person. Before going ahead we should first understand the ‘meaning of supplier, recipient and toxable person. “Supplier” meansin relation to any goods or services or both, shall ‘> mean the person supplying the said goods or services or both and ‘> shall include an agent acting as such on behalf of such supplierin relation tothe goods or ‘services or both supplied “recipient of supply of goods or services or both means— (@) Where a consideration is payable forthe supply of goods or services or both, the person whois liable to pay that consideration; (b) Where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods isgiven ormade available; and (c) Where no consideration is payable for the supply ofa service, the person to whom the service is rendered, and any reference to a person to whom a supply is made shall be construed as a reference to the recipientof the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services orboth supplied “Taxable Person’ means a person whois registered or liable to be registered under section 22 or section 24 means the liability to pay taxby the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under section 9(3) or 9(4), or under section 5(3) or 5(4) ofthe Integrated Goods and Services TaxAAct. ‘meansan individualora Hindu Undivided Family who undertakes cultivation of and- (2) by own labour, or (b) by he labour of amily, oF (c) by servants on wages payable in cash or kind or by hired labour under personal supervision or the personal supervision of any member ofthe family “Registered person” means a person - ‘> who is registered under section 25 ‘> but does not include a person having a Unique Identity Number V'Smart Academy wwnwivsmartacademy.com CAVishal Bhattad (8 09850850800Normal Charge Reverse Charge inv “Supplier Vale 1,00,000| Assessment Supplier has to assess the tax & transferto _| Recipient has to assess the tax and Supplier Recipient willnot charge GST in invoice. Payment Suppliers liable to make payment to Govt Recipients able to make paymentto Govt toC.G. Registration Supplier has to register under GST Recipient has to register under GST Due date of Monthly in some cases quartery] Monthly [In some cases quarterly] Payment Time of Goods- Sec 12(2) of CGST Goods- Sec 12(3) of CGST Supply Service - Sec 13(2) of CGST Service - Sec 13(3) of CGST rat eng Byusing electronic cash ledger eo Recipient cannot use his electronic credit ledger for Payment | = eee or eee payment of GST on such supply, but after payment of a GST under RCM, he can take input tax credit as per the provision of TC. GST shall be paid by the recipient of goods or services or both, on reverse charge basis, inthe following cases > Supply of goods or services or both, notified by the Government on the recommendations ofthe GST Council (See 9(3)) > Supply of taxable goods or services or both by an unregistered supplier toa registered person, (Sec 9(4)) All the provisions of the CGST Act shall apply to the recipient inthe aforesaid cases as if he is the person liable for paying the tax in relation to the supply of such goods or services or bot, CAVishal Bhattad 09850850800 wrwwivsmartacademy.com V’Smart Academyrn ‘The Government may, on he recommendations ofthe Counci, ‘> bynotiication, specify categories of supply of goods or services or both, ‘the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and allthe provisions ofthis Act shall apply to such recipient as ithe isthe person liable for paying the tax in relation tothe supply ofsuch goods or services or both. NIN 42017-CT (Rate) RCM Notified Goods | wnisz07.urr gato Dated 28th June, 2017 NIN 1012017, (Rate) S.No] Tariff item, Description of Supplier of Recipient of supply subsheading, | supply of Goods ‘goods (Liable to Pay Tax heading or Chapter, ) (2) 3) 4) 6) 1 080 Cashew nuts, not | Agriculturst ‘Any registered person shelled or peeled 2, | 049070 Bidi Wrapper | Agrcuturist ‘Any registered person leaves (lendu) 3 2401 ‘Tobacco leaves | Agricuturst ‘Any registered person 4 | 5004t0 5006 Sik yarn ‘Any person who manufactures | Any registered person sik yarn from raw sik or sik wor ‘cocoons for supply of sk yarn 4A ‘Any registered person sit Raweaton | Aja (Ney inserted by Nh 620176 at & NNASHYTT Rte) 5. - ‘Supply oflattery. | Slate Government, Lottery distributor orseling agent. Union Tetitry or Explanation - For the purposes of this ent, tery any local authority sistrbvor or seling agent has the same meaning 25 assigned to itn clause (jaf Rule 2 of the Loteries| (Regulation) Rules 2010, made under the provision Jot sub section 1 of secton 1 ofthe Lottras| (Regulations) Act, 1998 (17 of 1988). 6. [Any Chapter Usdvehics.sezed” | Contral Goverment, Stato Govt, | Any rogistord person and coniscated goods caer aeh ns, | Union teary oalocal authoiy | Newly inserted by Nin 37/2017) and soap 7. | AnyChapter |PSLC (Private Sector] Any registered person | Any registered person Lending certificate) (Newly inserted by Nin 11/2018) State Govt, Local Authority Union Teritory a © @ 2 fit © daa! nD a» or Selling agent Wale Supply.cl Lotion Exemption: a by any person other than Stato Rate_|| | Government / Union Territory’ Local Authority subject tothe 28% || | Condition that the supply of such lottery has suffered appropriate GST when supplied ‘2 by State Government, Union Territory, Local authority Value =100/128 of ‘3 tothe lottery cistrbutor or selling agent appointed by the by ‘face value or sate government, union tertory or local authority price notified in the Official Gazette by the organising State whichever is higher V'Smart Academy wwnwivsmartacademy.com CAVVishal Bhattad (09850850800NIN 13/2017-CT (Rate) RCM Notified Services NIN 42017-UTT (Rate) NIN 420174 (Rate) Dated 28th June, 2017 Groner {a The person who pays orisliable to pay freight forthe transportation of goods by road (GTA) in goods cariage,locatedin the taxable territory shall be treated as the person who receives the service for the purpose of this notifications. (0) Body Corporate” has the same meaning as assigned to itin clause (11) of section 2ofthe Companies Act, 2013, (c) A “Limited Liability Partnership” formed and registered under the provisions of the Limited Liability Partnership Act, 2008 shallalso be considered as a partnership fim or firm, 10 ibility Person Mentioned in (a) to (a) ie. Goods Transport Agency who has not pad central tax atthe rate of (Cost ewasasren {rer yn a Goods Transport Agency (GTA) Defined in para 22e) of NN122017 means any person who provides service in relation to transport of goods by road AND issues Consignment Note, by whatvername cal Where person liable topay reightis 2}, Any factory registered under orgovernedby factories Act, 1948 b}_ Any society registred under Societies Registration Act, 1860 or under any ‘thera for mebeingin force nany pat of India «)_Anyco-operaive society established by or under any, 4) Any person registered under CGST Act, under IGST Act, under SGST Act orUTGSTAct )_ Any body corporate estabished, by orunderany law, or 4} Any partnership firm (Including LLP) whether registered or not under any lawincluding association of persons }_ Any Casual Taxable Person > > Society registered co-operative Society > Any person registered under CGST Act, under IGST Act, under SGST ‘Actor UTGSTAct > Body Corporate > Partnership Firm or AOP > Casual TaxablePerson Locatedintaxablterritory “Provided that nothing contained in this entry shall apply to services provided by a goods transport agency, by way of transport of goods in a goods carriage by road, to, - (a) a Department or Establishment of the Central Government or State Governmentor Union tertory; or (b)local authority; or (c) Governmental agencies, Which has taken registration under the Central Goods and Services Tax Act, 2017 only for the purpose of deducting tax Under section 81 and not for making a taxable supply of goods or services. (NIN 29/20480CT (R) dt31/12/2018) GTAIslabein following cases 4. ifmotfied person located in nontaxable terry: 2 if person liable to pay {freight is not fling under noted categories, ption NIN 32/2017 CT (Rate) ( EER CA Vishal Bhattad (09850850800 woww.vsmartacademy.com V'Smart AcademyExemption is available for Services provided by a goods transport agency fo an unregistered person, including an unregistered casual taxable person, other than the following recipients, namely: - (@) any factory registered under or governed by the Factories Act, 1948 (b) any Society registered under the Societies Registration Act, 1860 or under any other law forthe ime being in force in any part of India (c) any Co-operative Society established by or under any law forthe ime being in force (d) any body corporate established, by or under any law forthe time being in force (e) any partnership firm whether registered or not under any law including association of persons (any casual taxable person registered under the GST Act. V'Smart Academy wwnwivsmartacademy.com CA Vishal Bhattad (09850850800| forsee ty sat "Services provided by an individual advocate including a senior | to any business inthetaxableteritory advocate or firm of advocates by way of legal services, directly entity located in the or indirectly taxable territory Explanation.- "legal service" means any service provided in relation to advice, consultancy or assistance in any branch of law, in any manner and includes representational services before any court, tribunal or authority.” 1)"Senior advocate’ [para 2(zzd)NIN 12/2017] has the meaning assigned toitin section 16 ofthe Advocates Act, 1961". As per Section 16 ofthe Advocates Act, 1961 an advacate may, with his consent, be designated as senior advocate if the | Supreme Courtor a High Courtisof opinion thatby vitue ofhis abilty [standing tthe Bar or special knowledge or experience inlaw] hes deserving of such istincton. 2)"Advocate” [para 2(b)NIN 12/2017] shall have same meaning as assignedto tuls2(1)(a) ofAdvocates Act, 1961 3)"Business Entry” [para 2(n)NIN 12/2017] means any person carrying out business. 4)"LLP” [explanation (e)NIN 22/2017 C.T. (Rate) ]A Limited Liability Parnership" formed and registered under the provisions ofthe Limited Liability Partnership Ac, 2008 shall also be considered as a partnership fim ora fim. Issue \Whetherlegal services other than representational services provided by an individual advocate ora senior advocate toa business ently areiablefor GST under reverse charge mechanism? Clarification Yes. in case of legal services including representational services provided by an advocate including a senior advocate toa business enily, GSTis required tobe paidby the recipient of the service under reverse charge mechanism, ie. the business ently Representation By Senior Advocate Porson liable to pay tax: Business © entity in Taxable terior isiable ‘Arbitral Tribunal Business entity in taxable territory Note : 4) Arbitral Tribunal is a private tibunal constituted by parties in disputes where one or more person (Arbitrator) are refered by the Parties to resolve the dispute in themselves and by who's decision they agreed to bound. 2) Definition of SERVICE as given ls 65-B (44) excludes fees taken in any court or tribunal establisned under any law. That exclusion will not cover fees paid to ARBITRAL TRIBUNAL. e ARBITRATOR Reliance Energy ih Rel Reliance Infocomm PCL Reliance Capital Bi CAVishal Bhattad 909850850800 woww.vsmartacademy.com V’Smart AcademyPerson liable to pay tax : Body Corporate or partnership firm in @ ‘Any person ‘Any body corporate or partnership firm located in taxable territory taxable erritoryis liable “LLP” [explanation (e)NIN 22/2017 CT. (Rate) ] A"Limited Liabilty Partnership" formed and registered under the provisions of the Limited Liability Partnership Act, 2008 shall also be considered as a partnership firm orf. Ned Src aN ta Esa? Lakme Person liable to pay tax : Business 2 Central Govt. © 2 State Govt. 2 Union Territory > Local authority {a) Renting of immovable property, and (b) () Services by the department of post by way of speed post, express parcel post, ie insurance, and agency services provided to a person other than Central Government State Government or Union Terttory or local authority {i)Services in relation to an aircraft or a vessel, inside or outside the precincts ‘ofa port or an airport (ii) Transport of goods or passengers © Business entity in taxable territory entity in Taxable territory is lable In following cases goverment or local authority is lable {a)renting ofimmovable property, and (b) (i) Services by the department of post by way of speed post, express parcel post, life insurance, and ‘agency services provided to a person other than Central Government Siate Government or Union Terry orlocalauthoy. (i), Services in relation to an aircraft or ‘a vessel, inside or outside the Precincts ofa portoran airport li) Transportof goods orpassengers V'Smart Academy \wwow.vsmartacademy.com CA Vishal Bhattad (909850850800 EiO © Person liable to pay tax : Any > Cental Govt fees person in taxable 2 Stale Govt Any registered person under a 2 Union Terttory GST Act read with clause (v) of 2 Local authority Section 20 of GST Act,2017 by way of Renting of immovable property, Explanation :- ‘renting of immovable property" means allowing, permiting or granting access, entry, occupation, use or any ‘such facility, wholly or party, in an immovable property, with or without the transfer of possession or control of the said immovable property and includes letting, leasing, icensing or other similar arrangements in respec ofimmovable property. (NIN 15/2018-CT (Rate) at26/06/2018) New Category under reverse charge for services added as follow: and (NIN 05/2049 -IT(R) dt 29/03/2019) CEs Cee KER) or Space Person liable to pay taxis. promoter ‘Any Person Promoter inthe form | Person liable to pay tax is ent promoter ofa project @ ® Any Person Promoter ‘wwwivsmartacademyicom V’Smart AcademyExplanation:- (2) The term “apartment” shal have the same meaning as assigned to itn clause (e) under section 2 ofthe Real Estate (Regulation and Development) Act, 2016 (16 f 2017). (0) the term “promoter” shall have the same meaning as assigned to itn clause (zk) under section 2 of the Real Estate (Regulation and Development) Act, 2016 16 of 2017). (0) the term “project” shallmean a Real Estate Project (REP) ora Residential Real Estate Project (RREP); (¢) ‘the term “Real Estate Project (REP)” shall have the same meaning as assigned to itn in clause (zn) of section 2 ofthe Real Estate (Regulation and Development) Act, 2016 (16 of 2016). (e) The term “Residential Real Estate Project (RREP)” shall mean a REP in which the carpet area of the commercial apartments isnot more than 15 per cent. ofthe total carpet area ofall the apartments n the REP (0) “floor space index (FS!)” shall mean the rato ofa building's total floor area (gross floor area) to the size ofthe piece of Jand upon which tis built” Person liable to pay tax : Company By To ‘or Body Corporates liable Director of a Company or Body Corporate | Said Company or Body Corporate Note 4 Director Company — Whole time director - Employee of the Company Non-Executive director - Can't be called as employee of Company. Hence sitting fees, commission is taxable. Person liable to pay tax : Any person carrying any insurance business located in taxable Insurance Agent ‘Any person carrying insurance territory business eg.LICorGIC Agent XT Ni Insurance Agent has now been defined via NIN 13/2017 -CT(Rate) dt 25/1/2018 i. ‘insurance Agent’ shall have the same meaning assignedto itin sec 2(10) of insurance Act 1938, “insurance Agent” means an insurance agent fcensed under section 42 who receives or agrees to receive payment by way of commission or other remuneration in consideration of hs solcting or procuring insurance business [including business relating tothe continuance, renewalor revival of policies of insurance] [Comment Many insurance companies who are seling their policies through ECO operator not being icensed as Insurance jagent under sec 42 of Insurance Act, for them reverse charge shall not be applicable. V'Smart Academy wwnwivsmartacademy.com CAVishal Bhattad (09850850800 [83 |Person liable to pay tax : Banking © e company or financial Institution or Non- banking financial institutions Recovery Agent Sa Banking company locatedintaxable territory or ‘2a Financial Institution or ‘2NBFC Person liable to pay tax : A Publisher music company, producer or the like, located in the taxable territory __Parhuttner, Music Composer, ‘AMusic company, producer photographer, artist or the lke, located inthe taxable tertry Musical Artistic Dramatic @ Lytics of Song Painting by Painter Acting by Actor Person liable to pay tax : A Publisher located in the taxable territory ay ‘An Author ‘APublsher located in the ® taxable tertitory ae [Conditions:-(Reverse chargeIs not applicable nfollowing cases) Provided that nathingcontainedin this erty shall apply where, (the author has takon registration ,and{filed a declaration, within the ime imitwith the jurisdictional GST commissioner that ‘D he exercises the optonto pay cantaltaxon the service under forward charge and ‘> tocomply with allthe provisions as they apply to person lable for paying the taxi elation tothe supply of any goods or services orbothand ‘> thathe shall notwithéraw the said opton within a period of year fromthe date of exercising such option; (i) the author makes a declaraton, onthe invoice issued by him in Form GST Inv-ltothe publisher. |Note:-Thus, where the authors registered and he make a declaration to pay the tx to proper ofcer hen publisher isnot requiredto pay tax & Author \nilpay tax underforward charge. 10 E To Members of Overseeing committee | Reserve Bank of India (RB!) CAVishal Bhattad 09850850800 wrwwivsmartacademy.com V’Smart AcademyPerson liable to pay tax : A banking company or a non-banking financial company, located in the taxableteritory. Individual Direct Selling Agents (DSAs) other than a body || A banking company or a non-banking financial corporate, parinershipor limited liability partnership frm. | company, located inthe taxable teritory. New Category under reverse charge for services added as follows: (NIN 29/201 Person liable to pay tax : A banking ‘company located nthe taxable territory. "T(R) dt 31/12/2018) Business Facilitator ‘Abanking company located in the taxable teritory. Not “ust For Knowledge: "2(0) “business facilitator or| 1.typesofservces supped byBusiness Faciltatrs-BusnesFaclitor prove varou evoes hichinces: business correspondent” means an | a) ientfcatonafborawersandfnntofacvies intermediary appointed under the | _b)Colestonandpretinay processing of ban aplzaons inching verfcatonof prinaryinornonsts business facilitator model or the | — <)eresing anareness about saung ard ver products andeducatonardadvee onmaragingrraney ard debt cautllng business correspondent mi <}grocestngndsubmissonfapacabonofbanks _e) pomonandnurtun Sl-HelpGrovsslJont Laity groups banking company 0 ‘Post-sanctonmontanng 4) Moning and Randtairg of Se-Help Grupstoin Laity company under t ‘Grupsiredt Grupstthe and )Folowuptrrcovery Issued by the 2.The bangs busines fclaton form of commision fa proving sun sanices, so as per amenent bank ar abe fo aymen of GST 35recevero sevice on commision paidby ham Person liable to pay tax : A business correspondent, located in thetaxable teritory ‘An agent of Business Correspondent (BC) ‘A business correspondent, located in the taxable territor ‘Analysis: 41. Business correspondent - Are appointed by bank after conducting thorough due diligence Business correspondents can be NGOsIMFIs set-up under Societes/Trust Acts, Societies registered under Mutually Aided Co-operative Societies Acts or the ‘Cooperative Societies Acts of States, registered NBFCs not accepting public deposits and postofcers 2. Business correspondent supplies all ypes of services which are provided by business facilitator and in addition they are also engaged into providing small value creit and recovery ofthe same, 3. The bank pays them in the form of commission or fees for providing such services, These business correspondent have also appointed theiragents and paying them commission orfees ‘Asper the amendment, business correspondents willbe liable forthe payment of GST as receivers of services on commission paid by the business correspondents to their agent. A registered person, located in the taxable territory Security services (services provided by way of supply of securily personnel) provided (Any person other than a body corporate) a registered person Provided that nothing containedin this entry shall apply to, (Exceptions) — ()) (@)aDepartmentor Establishment ofthe Central Governmentor State Government or Union tertory; or (b) local authority: or (6) Governmental agencies; which has taken registration under the Central Goods and Services Tax Act, 2017 (12 of 2017) only forthe purpose of deducting tax under section 51 of the said Act and not for making a taxable supply of goods or services; or (i aregistered person paying tax under section 10 ofthe said Act V'Smart Academy www.vsmartacademy.com CAVishal Bhattad (09850850800 Bi[Comment:- () Service must be supply of security personnel- The entry cover the secutty service whichis provided by way of supply of security personnel. Therefore it cover only supply of man power for security purpose, such as supply of security man at societyofices! ‘commercial spaces/bunglows/bouncers/bodygaurd, etc. Hence there must be supply of man or women for security (i) Following security service are not cover under RCM :- 4)Dogsniffer b)Investigation Service c) Background check 4) CCTV securityIT enable equipment security (i) itthe services are providedby body corporate, those will continue to beliable under forward charge (iv) Body corporate as define in section 2(11) ofcompany ct, 2013 Example:- Company, Public Company, One person company, foreign company (v) Body corporate doesnot include an individual, HUF, firm (includingLLP), AQP or 801, cooperative society, society (vi) Service must be received by Registered person other than specified Persontliable to pay tax: Any the body corporate located inthe taxableterritoy, ‘Any person other than a body corporate, ‘Anybody corporate located (Who supplies the service toa body corporate and does not inthe taxable tortor. issue an invoice charging CGST atthe rate of 6% and SGST {6% to the service recipient Suppliers of service by way of renting of any motor vehicle designed to carry passengers where the cost of fuels included in the consideration charged from the service recipient have an option to pay GST either at > 5%6uith limited ITC (of input services in the same line ofbusiness) or 2 12%6ith ful TC. Clarifications inthe circular: ‘when any services placed under RCM, the supplier shallnot charge any tax from the service recipient 2. a. where the supplier of the service charges GST @ 12% from the service recipient, the service recipient shall not be liable topay GSTunder RCM; and, ». where the supplier of the service does not charge GST @ 12% from the service recipient, the service recipient shall be liable to pay GST under RCM RCM shall be applicable only ifallthe below given conditions are satisfied: a. Supplierisnotabody corporate b. Supplier doesnotissue invoice charging GST @12% c. Service Recipientis a body corporate located inthe taxable territory. gi CAVishal Bhattad £8 .09850850800 wrwwivsmartacademy.com V’Smart AcademyPerson liable to pay tax : CoO ora EO Borsa aelrersonttia borrows the securities Lender Borrower person who deposits the socuits registered in his name or (ie. a person who borowsthe secures inthe name of any cher person duly authored on his behalf with Under the Scheme through an approved ‘an approved intermediary forthe purpose of lending under the intermediary of SEB), Scheme of SEB!) Issue:- whether the supply of securities under Securities Lending Scheme, 1997 (“Scheme”) by the lender is taxable under GST. Fact:- Securities and Exchange Board of India (SEB!) has prescribed the Securities Lending Scheme, 1997 forthe 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 ofthe same type ‘or class at the end ofthe specified period along with the corporate benefits accruing on the securities borrowed. ‘The transaction takes place through an electronic soreen-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, __ Securities securities Lender Legal provision:- 1. Securities as defined in section 2(h) of the Securities Contracts (Regulation) Act, 1956 are not covered inthe definition of goods under section 2(52) and services under section 2(102) ofthe CGST Act. ‘Therefore, a transaction in securities which involves disposal of securities is not a supply in GST and hence nottaxable, 2. Services as per Section 2(102) of the CGST Act, : -‘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. — ‘services’ includes faciitating or arranging transactions in secures; 3. The explanation added to the definition of services wf. 01.02.2019 i.” includes facitating or arranging transactions in securities" is only clarificatory in nature and does nat have any bearing on the taxabilty ofthe services under discussion (lending of securities) n past since 01.07.2017 butrelates to facilitating or arranging transactionsin securities. Clarification 1. Ithas been clarified that lending of securities is nota transactionin securities asiit does not entail disposal of securities 2 the activity of lending of securities would be treated as supply of services by the lender. Thus, GST is required to be discharged by the lender onthe fee chargedin respect oflending of secunties. V'Smart Academy wwnwivsmartacademy.com CAVishal Bhattad (09850850800IGST (Incase the lender has already 1, | 4M7i2017-30/9/219 Lender (forward charge) | sig CQST/SGSTIUTGST, they would not be required to pay IGST again in lieu of those transactions.) 2, | 111072019 and onward | Borrower (RCM) IcsT 1. Lenderis 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 forthe purpose of ending under the scheme 2. Borrowerisa person who borrows the securities under the scheme through an approvedintermediary. 3. Approved intermediaryis a person duly registered by the SEB! under the guidelines/scheme through whom the lender will deposit the securities forlending and the borrower will borrow the securities; CAVishal Bhattad (8 09850850800 wrwwivsmartacademy.com V’Smart AcademyRCM Notified Services (Notified in IGST) NIN 10/2017-GST (Rate) Dated 28th June, 2017 Person liable to pay tax:: Any person @ © locatedin taxable territory ‘Any person from anon taxable | Any person other than non taxable terttory ‘online recipient (NTOR) Note 1 When any service provided by a person in non taxable teritory to a person in a taxable tertory then it amounts to import of services (Inter-State Supply) and subject to IGST Note : Non taxable online recipient (NTOR) is discussed in the chapter of place of supply under IGST Act, 2017 ry aod Person lable to pay tax : Importer as defined in clause (26) of Section 2 of the Customs Act, 1962 located inthe taxable territory Person located in non-taxable territory V'Smart Academy www.vsmartacademy.com CA Vishal Bhattad (09850850800ae 3 er ‘The central tax in respect of the shall be paid by such porson on reverse chargo basis as the recipiontotsuchsupply of goats orsenicesorbathand allthe provisions ofthis Act shall appl ta such recipient las if nes the person Fable for paying the tax in elation to the supply of such goods or serves orbth Baa Ree Person liable to pay tax is promoter Purchase from unregistered person promoter Note:- Reverse Charge is applicable only to the extent of shortfall to make it 80% Person liable to pay taxis promoter Person liable to pay tax is promoter Supplied by unregistered person Note :Above reverse chargeis applicableinacase {i)Promotoris opting for 1% or 5% scheme of NIN 11/2017 {i) Promoterhas o pay GST under section 9(4) ofthe CGSTAct, a the rate of 18% onal such inward supplies (othe extent short of 80% ofthe inward supplies from registered supplier) {ii) Where cement is received from an unregistered person, the promoter shall pay tax on supply of such cement on, under section 9(4) ofthe CGST Act, at the applicable rate which 1s 28% (CGST 14% + SGST 14%) atpresent. (iv) Moreover, GST on capital goods shall be paid by the promoter on reverse charge basis, undersection 9(4) ofthe CGSTAActat the applicable ates. Introduction : Electronic Commerce Operators (ECO) display products as well as services which are actually supplied by some other person to the consumer, on their electronic portal, The consumers buy such goods/services through these portals. On placing the order fora particular product service, the actual supplier supplies the selected product service to the consumer. The price/ consideration for the product! service is collected by the ECO from the consumer and passed onto the actual supplier after the deduction of commissionby the ECO. EM CA Vishal Bhattad (09850850800 woww.vsmartacademy.com V’Smart Academyrole Br Cas Niezs The Goverment may, on the recommendations of the Council, > bynofifcation, specify categories of services > the tax onintra-State supplies of which shall be paid by the electronic commerce operator i such services are supplied through it, and ‘ allthe provisions of this Act shal apply to such electronic commerce operator asif hes the supplier liable for paying the taxin relation tthe supply of such services Proviso Sec 2(45) : E Commerce Operator - means any person who owns, operates or manages digital or electronic facity or platform for electronic commerce Notified ECO NIN 17/2017 - CT (Rate)- 28th June, 2017 Ithas notified the folowing categories of services supplied through ECO for this purpose (2) Transportation of Passengers by Cab etc.: Services by way of transportation of passengers by a radio-axi, motorcab, maxicab and motorcycle involving an ECO <——_____ Payment of GST ‘person Any person (b) Renting of Accommodation by unregistered Hotels : Services by way of providing accommodation in hotels, inns, quest houses, clubs, campsites orother commercial places meant fr residentialorlodging purposes, ‘exceptwhere the person supplying such service through electronic commerce operatorisliable for registration under section 22(1) ofthe CGSTAct. V'smart Academy wwwysmartacademycom CA Vishal Bhattad (09850850800Sar ated Mares involving an ECO <—____ Payment of GST i" anymanner ‘Any person (c) Service by Unregistered Plumber, Housekeeper etc: services by way of house-keeping, such as plumbing, carpentering etc, except where the person supplying such service through electronic commerce ‘operator is able for registration under sub-section (1) of section 22 of the said Central Goods and Services TaxAct (inserted by NIN 23/2017) qf Se im Bi CAVishal Bhattad 09850850800 wrwwivsmartacademy.com V’Smart Academy