Clarification on place of supply applicable for custodial services provided by banks to Foreign Portfolio Investors

Last updated: 28 June 2024

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This notification clarifies the place of supply for custodial services provided by banks to Foreign Portfolio Investors (FPIs). Previously, some tax authorities believed these services should be taxed where the bank is located, as per Section 13(8)(a) of the IGST Act. The Central Board of Indirect Taxes and Customs (CBIC) has issued this clarification to ensure consistent application of GST law across all field formations.

F. No. CBIC-20001/4/2024-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing

North Block, New Delhi

Dated the 26th June, 2024

To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/Commissioners of Central Tax (All)
The Principal Directors General/ Directors General (All)

Madam/ Sir,

Subject: Clarification on place of supply applicable for custodial services provided by banks to Foreign Portfolio Investors-reg

Representations have been received seeking clarification on the Place of Supply in cases of Custodial Services provided by Banks to Foreign Portfolio Investors (hereinafter referred to as “FPIs”), as a view is being taken by some field formations that the Place of Supply in case of ‘custodial service’ would be determined as per Section 13(8)(a) of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as “IGST Act”), i.e. the location of the service provider (banks or financial institutions).

2. In order to clarify the issue and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168(1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), hereby clarifies the issue as under:

For full notification please refer to the attachment.

FAQ :

The notification clarifies the place of supply applicable for custodial services provided by banks to Foreign Portfolio Investors (FPIs).

Some field formations were taking the view that the place of supply for custodial services would be the location of the service provider (the bank), as per Section 13(8)(a) of the IGST Act.

The clarification has been issued by the Central Board of Indirect Taxes and Customs (CBIC) under the powers conferred by Section 168(1) of the CGST Act.

The clarification was issued to ensure uniformity in the implementation of GST law across different field formations regarding these specific services.

FPIs refers to Foreign Portfolio Investors receiving custodial services from banks.