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

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....Lending Scheme, 1997. 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 b....

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....e name of any other person duly authorised on his behalf with an approved intermediary for the purpose of lending under the scheme. (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....

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....ecurities; 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 GGST 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 o....

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....er. 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 se....