GST on a Stock market trader

Taxation
1

Category: Business/F&O Equity trader

1.Do I need to register for GST, since my turnover is well above 20 lakhs in F&O?

2.Can/Should I claim input credit on GST paid on buying equity and F&O and get refund of the same?

2

Hello,

Section 16 of the GST Act speaks about the eligibility & conditions for taking input tax credits. The specific section, states that any registered person can avail credit of tax paid on the inward supply of goods or services or both, which is used or intended to be used in the course or furtherance of business. The credit chain ends when such goods or services are sold to the final customer of personal use.

Further, Input tax credit is not available in some cases as mentioned in section 17(5) of CGST Act, 2017. Some of them are as follows:

f. Goods and/or services used for private or personal consumption, to the extent they are so consumed;

In case of the brokerage industry, the charges levied on the Contract note are charged to the end client and these charges cannot be passed by the client in the supply chain. As such, you will not be able to take input credit of the GST that is paid in respect of the transactions made with your account at Zerodha.

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3

No its not required unless you are into supply of taxable supply of goods or services

for Seurities the definition specifically exluded securities in Sec 2(52) & secuirty covers sec 2 (101) “securities” shall have the same meaning as assigned to it in clause (h) of
section 2 of the Securities Contracts (Regulation) Act, 1956;

(52) “goods” means every kind of movable property other than money and
securities but includes actionable claim, growing crops, grass and things attached to
or forming part of the land which are agreed to be severed before supply or under a
contract of supply;

Securities defination as per Securities Contracts (Regulation) Act, 1956 is a inclusive definition:-

(h) “securities” include— (i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like
nature in or of any incorporated company or other body corporate; 9
[(ia) derivative;(ib) units or any other instrument issued by any collective investment scheme to the investors in such schemes;] [(ic)security receipt as defined in clause (zg) of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;] [(id) units or any other such instrument issued to the investors under any mutual fund scheme;] (ii) Government securities; (iia) such other instruments as may be declared by the Central Government to be securities; and (iii) rights or interest in securities;

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4

Thank you for the elaborate explanation.

  1. If I’m indeed into taxable supply of services, Do F&O turnover be included in the calculation of “aggregate turnover” exemption limit of 20lakh? I know that exempt supplies need to be included in aggregate turnover. Not sure F&O turnover needs to be included too?

  2. Does export of services, say freelancing turnover need to be included in GST aggregate turnover calculation?

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For the purpose of turnover under GST both will be added. Exempt under GST and Taxable

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6

Thank you very much. To confirm,

  1. F&O turnover is a “exempt” supply according to GST.

  2. If I only have exempt supplies and even if I have >20lakh aggregate turnover, I do not need to register for GST.

  3. F&O turnover is to be calculated as mentioned here. https://zerodha.com/varsity/chapter/turnover-balance-sheet-and-pl/

  4. If I have any taxable supply, then FO turnover+taxable supply need to be included in calculation of aggregate turnover (which if > 20lakh, need to register for GST)

  5. I’m into services export( which is a zero rated supply). I’m not sure if it is “exempt”. So, Do I need to register, if aggregate of all this > 20 lakh.

I can ask this in a different post if you desire. I really appreciate your help.

7

Trading in Equity is specific Excluded and the turnover limit of turnover for Export is not there, so you shall get yourself registered as well give undertaking online for the export turnover.

Do consult a GST consultant with document as there are cross linking of GST turnovers with IT Returns can have problem in future.