Blog No. 75: Clarification on taxability of shares held in a subsidiary company by the holding company.

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The GST Council has examined the issue that whether the holding of shares in a subsidiary company by the holding company will be treated as ‘supply of service’ under GST and will be taxed accordingly or whether such transaction is not a supply through the Circular No. 196/08/2023-GST dated 17th July 2023 and clarified the same.

 

To know more, read in detail about the circular below:

 

Issue

Whether the activity of holding shares by a holding company of the subsidiary company will be treated as a supply of service or not and whether the same will attract GST or not?

 

Clarification:

 

  1. Securities (shares) are neither goods nor services in terms of definition of goods under clause (52) of section 2 of CGST Act.

 

  1. Further, purchase or sale of shares or securities, in itself is neither a supply of goods nor a supply of services.

 

  1. Therefore, this activity cannot be treated as supply of services and no GST is to be taxed here.
 

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