GST for Traders in Shares and Securities

author portrait

Sakshi Shah

Aggregate Turnover
GST Registration
Trading Income
Trading Turnover
Last updated on February 9th, 2024

GST, or Goods and Services Tax, is an indirect tax levied on the supply of goods and services aiming to simplify taxation and create a unified market. It operates under a dual model, involving Central GST (CGST) and State GST (SGST), and allows businesses to claim Input Tax Credit (ITC). With multiple tax slabs, GST compliance includes registration, return filing, and tax payment, contributing to economic growth and efficiency while reducing tax evasion.

GST applicability for Securities Traders

The GST Act specifically excludes Securities from the definition of Goods. As per Section 2(52), Goods mean any movable property except money and securities. The definition of Services means anything other than goods, money, and securities. Thus, trading in shares and securities is not considered supply as per the GST Act and falls outside the purview of GST. Therefore, securities traders are not liable to register under GST.

However, it is important to note that if a broker is earning brokerage income from securities trading, GST registration is mandatory if such brokerage exceeds the threshold limit.

Find the best plan
Find the best plan
Find the best plan
Find the best plan

Should I include Trading Turnover in Aggregate Turnover?

Trading Turnover is the turnover calculated for each trading segment as per the reporting requirements of the Income Tax Act.

Aggregate Turnover includes the sum of the sale of goods and services. Since the definition of goods and services excludes securities, the aggregate turnover should not include trading turnover to determine the applicability of GST Registration.

Trading Expenses on Securities Trading

Expenses incurred on trading in securities also include CGST, SGST, or IGST. This is the GST on expenses such as brokerage, transaction costs, turnover fees, etc that the trader pays for transactions. The trader can claim such expenses against the income from trading while filing the Income Tax Return.

GST for Traders – Reporting in ITR-3

Turnover as per ITR must match with sales reported in the GST Return to avoid any mismatch notice. If the trader does not have GST Registration, they need not report details of GSTIN in the Income Tax Return. If the trader has income from any business other than securities trading and has GST Registration, it is advisable to report the trading turnover from securities trading under Non-GST Supply in the GST Return.


Do securities also cover derivatives?

The GST Act excludes securities from the definition of goods. Securities shall have the same meaning as per Section 2 of the Securities Contracts (Regulation) Act, 1956, and include shares, scrips, stocks, bonds, debentures, debenture stock, other marketable securities, and derivatives.

Is GST applicable on brokerage earned in stock-broking services?

Yes. A stockbroker provides stockbroking services that fall under the definition of ‘Services’ under GST. Therefore, such sale value must be included in Aggregate Turnover to determine the applicability of GST Registration.

My trading turnover from share trading exceeds INR 40 lacs. Do I need to register under GST?

Trading in securities does not fall under GST since the definition of ‘Goods’ and ‘Services’ as per the GST Act excludes securities. Therefore, even if the trading turnover exceeds the threshold limit, GST is not applicable.

Got Questions? Ask Away!

  1. Hi @Saurabh_Ghosh

    1. The treatment of income from the trading activity will remain the same irrespective of company account or individual account. They are classified under the same income heads such as capital gains or business/profession and taxes are calculated accordingly.
      If your turnover is less INR 400 cr then the Income Tax slab rate is 25% for companies. For Individuals, the income tax liability is taxed at the applicable slab rates.
    1. To claim GST ITC, you need to have a GST registration and need to file a GST return. However, when filing your Income Tax Return, you can claim expenses directly related to your trading activity like electricity bills, internet expenses, etc.
      Keep in mind, if you are claiming GST ITC you cannot claim the GST amount in your expense.
      For eg: if the electricity bill is INR 1180 (180 being GST), and you are claiming the ITC on INR 180, you claim only INR 1000 as an expense when filing your ITR. In case you do not have GST registration, you can claim the total of INR 1180 when filing the ITR.
  2. Thanks for the reply!
    So what i understood file gst for gst itc and remaining file itr for 100% benefit of expenses.

    So which is better practice to do,

    Have gst and file both gst and itr or just simply file itr no need of gst.

    I mean which gives complete benefit for expenses.

  3. @Saurabh_Ghosh,

    The GST Act specifically excludes Securities from the definition of Goods. So there is no requirement for traders to have GST registration.
    The GST paid on trading expenses such as brokerage, transaction costs, turnover fees, etc can still be claimed as an expense when filing the ITR.

  4. Thanks for that article it clearly solved most of my doubt!

    Last query to ask!:pray:
    Assume I’m GST Registered Security Trader

    If I buy computers, other consumer Durable expenses for my new trading desk office does getting GST ITC + Remaining Amount as ITR is the best policy to manage expenses ? (since I get gst ITC return + Remaining amount as expenses return in ITR)

    (I know GST not required just asking is it a better way to manage taxes)

  5. @Saurabh_Ghosh

    Since GST ITC claimed can only be used when you have GST liability. So it might make sense for a trader to claim ITC along with other expenses when filing the ITR.

    However, if you have GST payable then you can claim the ITC credit against that liability.

  6. @Saurabh_Ghosh,

    Also, since Capital Market traders are not required to have GST registration.

  7. Hi @nishant_khemani,

    You can drop your contact details on our contact us page so our team can get in touch with you to understand your requirements, tell you more about the process, pricing and discounts :slight_smile:

  8. Hi @Saurabh_Ghosh,

    Unlike, F&O and intraday trading which are classified as business activity for income tax purposes, you cannot claim expenses like brokerage, internet expenses, legal and professional fees, etc for short-term and long-term capital gains. But an investor can claim, any transfer expenses except STT like brokerage, stamp duty, etc for capital gains, when filing ITR.

    However, the Income Tax Act has defined the particular sections under which exemptions can be claimed on capital gains earned. The intention of the exemption is to allow the taxpayer to invest in a new Capital Asset within a specified time limit without any tax burden.

  9. @Saurabh_Ghosh,

    There has always been this question and a debate around the treatment of gains from equity shares as business income or capital gains.
    The answer is derived from the taxpayer’s intent of the transaction. Here’s an article discussing when to treat the sale of shares as Capital Gains or Business Income

Continue the conversation on TaxQ&A

39 more replies


Avatar for Nireka Avatar for Divya_Singhvi Avatar for Saurabh_Ghosh Avatar for nishant_khemani Avatar for Tamil_143 Avatar for Sreetama_Chakraborty Avatar for Bharti_Vasvani Avatar for SimpleTrader Avatar for HIREiN Avatar for Muskan_Balar Avatar for Shrutika_Shah Avatar for anurag_reddy Avatar for Anand_Krishnan Avatar for karan113 Avatar for s_p2 Avatar for Shanmuga_Sundaram Avatar for Surbhi_Pal Avatar for Max