27 Jun CBIC Circular on Place of Supply for Custodial Services to FPIs – GST Clarification 2024
CBIC has issued Circular No. 220/14/2024-GST dated June 26, 2024, addressing the place of supply rules applicable to custodial services provided by banks to Foreign Portfolio Investors (FPIs).
The Circular responds to concerns raised regarding conflicting interpretations on the place of supply for custodial services. Some field formations considered these services under Section 13(8)(a) of the IGST Act, linking them to the location of the service provider (banks or financial institutions).
Key clarifications provided include:
- Custodial services involve the safekeeping of securities for clients, as per regulations by the Securities and Exchange Board of India (SEBI).
- The Circular distinguishes these services from those provided directly to 'account holders' under Section 13(8)(a) of the IGST Act, which typically involve interest-bearing accounts like deposits and transfers.
- Accordingly, custodial services provided to FPIs do not fall under the definition of services to 'account holders' and thus are not governed by Section 13(8)(a) for determining place of supply.
- Instead, the place of supply for such custodial services is determined under the default provision of sub-section (2) of Section 13 of the IGST Act.
The Circular aims to standardize the interpretation and application of GST provisions across different field formations. It recommends dissemination through appropriate trade notices for wider understanding and compliance.
For detailed information, refer to the Circular here
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