Seeks to clarify nature of supply of Priority Sector Lending Certificates (PSLC)-regarding

Circular No.: 93/12/2019-GST
Date of Circular: 8th March 2019
Relevant Sections and Rules:

• Central GST Act, 2017: Section 9 – Levy and collection of CGST
• Integrated GST Act, 2017: Section 7 – Inter-State supply; Section 5 – Levy and collection of IGST
• Notifications Referenced:
  • Notification No. 11/2018-Central Tax (Rate) dated 28.05.2018
• Previous Circular Referenced: Circular No. 62/36/2018-GST dated 12.09.2018

Summary of Circular:

This circular clarifies the nature of supply and applicable tax (IGST vs CGST/SGST) for trading of Priority Sector Lending Certificates (PSLCs) by banks over the e-Kuber portal of RBI, for the periods before and after 28.05.2018.

1. Period 01.07.2017 to 27.05.2018 (Forward Charge Basis):
   • GST on PSLC trading was payable by the seller bank under forward charge, as per Circular No. 62/36/2018-GST.
   • Applicable GST rate was 12%.
2. Period from 28.05.2018 onwards (Reverse Charge Basis):
   • As per Notification No. 11/2018-CT(R) dated 28.05.2018, trading of PSLCs was brought under reverse charge mechanism, with buyer bank liable to pay GST.
3. Nature of Supply (for both periods):
   • The trading of PSLCs is to be treated as supply of goods in the course of inter-State trade or commerce.
   • Accordingly, IGST shall be payable on such supplies for both time periods.
4. Relaxation for Taxes Already Paid under CGST/SGST/UTGST:
   • In cases where the taxpayer has already paid CGST/SGST or CGST/UTGST instead of IGST for the supply:
     • Such payment will be considered sufficient compliance, and
     • No need to repay IGST for such transactions.

Source: Circular No.: 93/12/2019-GST