Gst on interest on delayed payment on margin facility by share broker

This query is : Resolved

GIRIRAJ PUNGALIA (Querist)
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16 January 2022 Person was using od limit/margin facility given by his stock broker as per terms decided verbally. On using this facility, person was charged interest as agreed. The issue is GST was charged on this interest amount citing this as interest on delayed payment. This was charged during 2017-18. After this year, stock broker was charging interest, but stopped charging GST on this interest on its own. My queries are-
1. Are private limited companies/stock broker directly registered with stock exchange allowed to charge GST on the interest taken wrt margin facility ?
2. Can we fight now with stock broker to recover GST charged on any legal platform, if its wrongly charged ?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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16 January 2022 1 yes, GST applicable.
2 yes.

GIRIRAJ PUNGALIA

GIRIRAJ PUNGALIA (Querist)
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16 January 2022 Hi Sir,
1. if you say GST is applicable then why stock broker discontinued to charge GST after F.Y.2017-18 on its own discretion.
2. Any idea about such forums, where we can challenge the broker.

CA Altamush Zafar

CA Altamush Zafar (Expert)
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17 January 2022 It appears that he started treating margin money as a loan and interest on loan is exempt. There were confusions during initial period on GST on various kinds of interest. Therefore it might by that your broker charged GST for playing safe. On more clarification he would have stopped charging GST. As per me also there was no GST. But since you had paid GST and it would have been already been deposited with the government in a practical scenario you wont be able to get refund of the GST already paid by you to your supplier and the same being paid to government.

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