The goods and services tax (GST) has been levied on stock brokers who are earning interest income by lending to clients for betting on the market, reported The Economic Times.
The Central Board of Indirect Taxes and Customs (CBIC) has clarified that brokers without non-banking financial company (NBFC) subsidiaries will have to pay 18% GST on interest earned from margin funding and delayed settlement payments, the report said.
Till now, these firms did not pay GST on such interest income, said the report, adding that the move will add to the cost of transaction for clients and squeeze smaller broking firms that do not own NBFCs.
“Any interest, delayed payment charges charged for delay in payment of brokerage amount, settlement obligations, margin trading facility shall be leviable to GST,” added the report quoting a CBIC circular.
Earlier, GST was only levied to interest on belated payments alone and interest earned through margin funding was exempted from it, the daily said.
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