We are a Private Limited Company engaged in providing counselling services and, in addition, regularly buy and sell shares and mutual fund units through our HDFC Demat account, which are accounted for as trading transactions in our books; we inadvertently did not report the sale transactions undertaken in f.y. 2025-26 in our GSTR-1 (GSTR-1 and GSTR-3B for f.y. 2025-26 have already been filed)—please advise, strictly under GST law, whether such sale transactions in shares and mutual fund units should be reported in GSTR-1 as “Non-GST” supplies or “Exempt” supplies, and whether the omitted f.y. 2025-26 transactions can be reported in the October 2026 GSTR-1 and, if so, under which table and by what procedure.
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GST Treatment and Reporting of Share & Mutual Fund Trading Transactions in GSTR-1
Replies (4)
Quick Summary
Sale transactions of shares and mutual fund units are outside the scope of GST (neither goods nor services) and do not need to be reported in GSTR-1 as Exempt or Non-GST supplies. Omitting them from FY 2025-26 GSTR-1 was legally correct, so no amendment is required in the October 2026 GSTR-1. However, 1% of the total sale value of securities must be treated as exempt turnover solely for calculating common ITC reversals under Rule 42/43 in GSTR-3B and GSTR-9.
Please provide me with the GST website link or reference where I can verify this. Our Income Tax Auditor has advised me that I need to show this under “Exempted Sales” in GSTR-9.
Both views can be right, they answer different questions.
Sale of shares and mutual fund units is not a supply of goods or services (securities are carved out of both definitions), so there is nothing to report in GSTR-1 for FY 2025-26, and no need to amend or add it in the October 2026 return. Reporting it as Exempt in GSTR-1 would actually overstate your exempt supplies.
Where your auditor's point probably comes from: securities sales still matter for the ITC reversal. Under Section 17(3) and the Explanation at the end of Rule 45, the value of securities is taken at 1% of the sale value when you work out exempt turnover (E) for common credit under Rule 42/43. So the check is:
- Did you have common input credit (rent, software, audit fees) in FY 2025-26?
- Was 1% of the securities sale value included in E when you reversed credit in GSTR-3B and worked out the annual Rule 42 true-up?
If not, the fix is a DRC-03 payment (with interest under Section 50 if credit was wrongly used), not an amended GSTR-1.
In GSTR-9, the securities value does not belong in the exempted or nil-rated rows of Table 5. Please confirm the right row from the GSTR-9 instructions on gst.gov.in with your auditor. The rate and valuation rule are in Rule 43/45 of the CGST Rules 2017.
This [ITC reversal guide for Rule 42 and 43](https://taxgarden.in/blog/itc-reversal-rule-42-43-common-credit-capital-goods-gst-india-2026) has a worked example of the 1% securities valuation in E.
Sir, Can you please guide where to show this in GSTR9 with 1% reversal as per Rule 42 ITC Reversal.
AS per Gemini AI : He referred to me to show this as "System behavior note: In GSTR-3B, you will claim the full ₹2,37,313 in Table 4(A)(5) and report the ₹11,764
reversal in Table 4(B)(1). The GST portal will automatically perform the subtraction to grant you the final eligible
Net ITC of ₹2,25,549 in Table 4(C)."
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