No GST on delayed payment charges recovered from the client towards trading of securities

Last updated: 22 March 2021

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The Uttar Pradesh Appellate Authority for Advance Ruling (AAAR) has ruled that Goods and Services Tax (GST) is not applicable to delayed payment charges recovered from clients for trading securities. These charges arise when a client fails to reimburse a stockbroker within the stipulated time for securities purchased on their behalf, leading to the stock exchange deducting funds from the broker's account. The AAAR reasoned that since the trading of securities itself is exempt from GST, the associated delayed payment charges should also be exempt.

Court :
AAAR, Uttar Pradesh

Brief :
The Hon'ble AAAR, Uttar Pradesh in the matter of SPFL Securities Ltd. [Order No. 06/AAAR/18/4/2019, dated April 18, 2019] held that Goods and Services Tax ('GST') is not liable to be paid on delayed payment charges recovered from the client towards trading of securities upon payment made by them beyond the time stipulated by the stock exchange and SEBI and for which payment is deducted by the stock exchange from the broker's account.

Citation :
Order No. 06/AAAR/18/4/2019, dated April 18, 2019

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