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GST for Traders in Shares and Securities

by | May 6, 2024 | Income Tax, Income from Trading | 0 comments

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Important Keyword: GST for Traders Aggregate Turnover, GST Registration, Trading Income, Trading Turnover.

GST for Traders in Shares and Securities

GST, short for Goods and Services Tax, is an indirect tax imposed on the supply of goods and services. It’s designed to streamline taxation and establish a cohesive market structure. Functioning under a dual model, GST comprises Central GST (CGST) and State GST (SGST), enabling businesses to avail Input Tax Credit (ITC). Featuring several tax brackets, adherence to GST involves activities like registration, return filing, and tax settlement. This framework promotes economic advancement, enhances operational efficiency, and diminishes instances of tax evasion.

GST applicability for Securities Traders

Under the GST Act, Securities are explicitly excluded from the Goods category. As per Section 2(52), Goods encompass any movable property except money and securities. Likewise, Services, defined as anything other than goods, money, and securities, don’t encompass trading in shares and securities. Consequently, transactions involving shares and securities aren’t deemed as supplies under the GST Act, thus evading GST jurisdiction. Consequently, securities traders are not obligated to register under GST.

Nevertheless, it’s crucial to acknowledge that if a broker earns brokerage income from securities trading, GST registration becomes obligatory if the brokerage surpasses the prescribed threshold limit.

Should I include Trading Turnover in Aggregate Turnover?

Trading turnover refers to the turnover calculated for each trading segment in accordance with the reporting requirements outlined by the Income Tax Act.

Aggregate turnover, on the other hand, encompasses the total sales of goods and services. Since securities are excluded from the definition of goods and services for GST purposes, trading turnover should not be included when determining aggregate turnover for GST registration.

Trading Expenses on Securities Trading

Expenses incurred during securities trading also include CGST, SGST, or IGST. These expenses encompass GST on items like brokerage, transaction costs, turnover fees, etc., which traders pay for their transactions. Traders can offset such expenses against their trading income when filing their Income Tax Return.

GST for Traders – Reporting in ITR-3

For traders reporting under ITR-3, it is essential to ensure that the turnover reported aligns with the sales reported in the GST Return to prevent any mismatch notices. Traders without GST Registration are not required to report GSTIN details in their Income Tax Return. However, for traders with GST Registration and income from businesses other than securities trading, it is advisable to report the trading turnover from securities trading under Non-GST Supply in the GST Return.

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Official Income Tax Return filing website: https://incometaxindia.gov.in/

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