Source Circular No. 34/8/2018-GST

Issue 

Whether Priority Sector Lending Certificates (PSLCs) are outside the purview of GST and therefore not taxable?

Claification

In Reserve Bank of India FAQ on PSLC, it has been mentioned that PSLC may be construed to be in the nature of goods, dealing in which has been notified as a permissible activity under section 6(1) of the Banking Regulation Act, 1949 vide Government of India notification dated 4th February, 2016. PSLC are not securities. PSLC are akin to freely tradeable duty scrips, Renewable Energy Certificates, REP license or replenishment license, which attracted VAT.

In GST there is no exemption to trading in PSLCs. Thus, PSLCs are taxable as goods at standard rate of 18% under the residuary S. No. 453 of Schedule III of notification No. 1/2017-Central Tax(Rate). GST payable on the certificates would be available as ITC to the bank buying the certificates.

We have an impression that Bitcoins, carbon credits, etc. are nothing but an extension of PSLC because they are not classifaible as Secuirty and freely tradeable Scrips in nature.

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