Monday 16 December 2019

No reversal of common ITC on Income from Securities?



The authorities seems to have asked the taxpayers reporting income from sales of securities in their Financials, to reverse part of the common ITC u/s 17(3) considering the same as an exempt supply The definition of exempt supply uGST means supply of any goods/services which attracts nil rate of tax/wholly exempt from tax and includes non-taxable supply (NTS) NTS is further defined as a supply of goods or services or both which is not leviable to tax uGST Hence, an income to fall under the exempt/NT supply should either be a supply of goods or services "goods” uGST means every kind of movable property other than money and securities... “services” uGST means anything other than goods, money and securities 'Securities' as can be seen above, gets excluded both from the definition of 'goods' & 'services' Merely because there is a mention in Rule 45 that the value of an exempt supply in case of 'securities' shall be taken as 1% of its sale value, will there be an obligation to reverse ITC?? Reference may also be drawn from Hon'ble CESTAT ruling agreeing to the assessee's contention that the income from investments in Mutual Funds may not fall under the ambit of 6(3) reversals as its not the business income of the assessee

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