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The Commodity Derivatives Advisory Committee has urged market regulator SEBI to take up the issue of GST on companies associated with delivery on the exchange platform, with the GST Council.
The advisory committee wants sellers on the exchange platform to issue integrated GST (IGST) so that the buyers can set off the credit in totality. In most cases, GST is currently split between Central and State GST.
For instance, when a seller registered for GST in Rajasthan gives delivery of goods to a buyer from Uttar Pradesh on the exchange platform, the buyer cannot set off State GST paid to the Rajasthan government in Uttar Pradesh.
To work a way out, the seller in this case has to register for GST in Uttar Pradesh and issue a separate bill to the buyer. This process is practically impossible as the seller cannot open offices in every buyer’s location. It leads to unnecessary cost for maintaining office at different locations and filing four quarterly GST returns at each centres.
Moreover, chartered accountants charge anywhere between ₹5,000 and ₹50,000 for GST-return filing even if there is no refund, said a trader.
SEBI has decided to take up the issue with the GST Council particularly when the regulator is insisting on compulsory delivery of all contracts.
Warehouse service
The advisory committee would soon recommend whether Warehouse Service Providers (WSPs) can be allowed to trade on exchanges in commodities for which they are not accredited by the exchange. WSPs face price risk while carrying out other business activities such as collateral management, financing and procurement supply chain management.
SEBI has decided to consider “national cooperative societies” established under Multi State Cooperative Societies Act, 2002 to hold 15 per cent stake in commodity exchange. It has already listed out 21 eligible entities which can bring in expertise to develop the market.
Currently, only stock exchanges, depository, banks, insurance companies and public financial institution are allowed to hold 15 per cent stake in exchange business. Investors and institutions which are holding over 15 per cent have to bring down their stake by May 5.
Most of these societies are related to rural markets especially agriculture commodities and allied activities.
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