Quick Summary
CBIC vide Circular No. 196/08/2023-GST dated July 17, 2023 has issued a clarification on the taxability of shares held in a subsidiary company by the holding company. Representations have been received from the trade and field formations seeking clarification on certain issues whether the holding of shares in a subsidiary company by the holding company will be treated as supply of service under GST and will be taxed accordingly or whether such transaction is not a supply. In order to clari
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FAQ :
The CBIC has clarified that holding shares in a subsidiary company by a holding company is not treated as a 'supply of service' and therefore does not attract GST.
Under the CGST Act, securities, including shares, are defined as neither goods nor services.
No, the activity of holding shares of a subsidiary company by a holding company, in itself, cannot be treated as a supply of services and thus does not attract GST.
The clarification is based on the definitions of goods and services in the CGST Act and the Securities Contracts (Regulation) Act, 1956, which indicate that shares are neither goods nor services.
No, a SAC entry mentioning services provided by holding companies does not automatically make the activity taxable under GST unless there is an actual supply of services by the holding company to the subsidiary, as defined by the CGST Act.
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