GST, or Goods and Services Tax, is an indirect tax levied on the supply of goods and services aiming to simplify taxation and create a unified market. It operates under a dual model, involving Central GST (CGST) and State GST (SGST), and allows businesses to claim Input Tax Credit (ITC).
GST applicability for Securities Traders
The GST Act specifically excludes Securities from the definition of Goods. As per Section 2(52), Goods mean any movable property except money and securities. The definition of Services means anything other than goods, money, and securities. Thus, trading in shares and securities is not considered supply as per the GST Act and falls outside the purview of GST. Therefore, securities traders are not liable to register under GST.
However, it is important to note that if a broker is earning brokerage income from securities trading, GST registration is mandatory if such brokerage exceeds the threshold limit.
Trading Expenses on Securities Trading
Expenses incurred on trading in securities also include CGST, SGST, or IGST. This is the GST on expenses such as brokerage, transaction costs, turnover fees, etc that the trader pays for transactions. The trader can claim such expenses against the income from trading while filing the Income Tax Return.
FAQs
Q1. Is GST applicable on brokerage earned in stock-broking services?
Yes. A stockbroker provides stockbroking services that fall under the definition of ‘Services’ under GST. Therefore, such sale value must be included in Aggregate Turnover to determine the applicability of GST Registration.
Q2. When is tax audit mandatory for F&O trading?
Tax audit is not mandatory if trading turnover doesn’t exceed 2 crore. Tax audit u/s 44AB will be applicable if turnover exceeds 2 crore and the net profit from such transactions is less than 6% of the turnover. Tax Audit u/s 44AB is mandatory if turnover exceeds Rs 10 Crore irrespective of profit or loss declared.
Q3. What is the business code for F&O income to be reported under ITR?
There is no specific code for intraday or F&O business. The business code of 09028- retail sale of other products can be selected for F&O trading.
