Securities and Money Under explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Some things are outside GST because Schedule III says so. Securities and money are outside for a more fundamental reason: they are not goods and they are not services, so there is nothing for the charging section to bite on.
That exclusion is narrow and precise, and a great deal of financial-sector activity sits just outside it.
Section 2(52) defines goods to mean every kind of movable property other than money and securities. Section 2(102) defines services as anything other than goods, money and securities — but expressly includes activities relating to the use of money or its conversion by cash or any other mode, from one form, currency or denomination to another, for which a separate consideration is charged. So the instrument is outside; the service around it is inside.
The two definitions, read together
Goods, s.2(52): "every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply."
Services, s.2(102): "anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged."
Money, s.2(75) is defined widely — Indian legal tender, foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance, or any other similar instrument recognised by the RBI when used as consideration to settle an obligation — but not any currency held for its numismatic value.
Securities takes the meaning in s.2(h) of the Securities Contracts (Regulation) Act, 1956 — shares, scrips, stocks, bonds, debentures, derivatives, units of collective investment schemes, government securities, and rights or interests in securities.
What falls outside
- Transfer of shares, bonds or debentures — securities, not goods or services. No GST on the transaction value.
- Issue of shares by a company — not a supply.
- Payment of money, in any of the s.2(75) forms, as consideration.
- Loans and deposits as such — the principal is money.
- Units of a mutual fund — securities.
What falls inside
The exclusion covers the instrument, never the intermediation.
- Brokerage and commission on securities transactions — a service, taxable at 18%.
- Portfolio and fund management fees, advisory fees, custodian and depository charges.
- Merchant banking, underwriting and issue management fees.
- Interest on loans — a service, but exempt under the services exemption notification for extending deposits, loans or advances where the consideration is by way of interest or discount. Processing fees, documentation charges and prepayment penalties are not interest and remain taxable.
- Currency conversion — expressly included by s.2(102) where a separate consideration is charged, and valued under Rule 32(2) with its own optional slab method.
- Numismatic coins and collectible currency — outside s.2(75) by exclusion, therefore goods.
- Cheque book issuance charges, demand draft commission, wire transfer fees — services.
Derivatives: securities, but watch the settlement
Derivatives are securities under the SCRA definition, so a derivative contract is not goods or services. What is taxable is the brokerage, exchange charges and clearing fees around it.
The complication is physical settlement. A commodity derivative settled by delivery results in an actual supply of the underlying goods, and that supply is taxable on its own terms. A cash-settled contract does not.
The consequence that catches people: exempt turnover
Because a securities transaction is outside supply, it is not exempt turnover — it is not turnover at all. That distinction matters for Rule 42.
But there is a specific carve-in. The Explanation to Rule 45 of the CGST Rules (and the corresponding Explanation to Chapter V) provides that for the purposes of Rule 42 and Rule 43, the value of security is to be taken as one per cent of the sale value of such security, in determining the value of exempt supply.
So an entity that trades in securities alongside taxable business does not escape apportionment. It includes 1% of the sale value of securities in exempt turnover for the reversal computation. Missing this is one of the more common errors in a treasury-heavy group.
Key takeaways
- Securities and money are excluded from both goods and services — outside the levy entirely.
- Section 2(102) expressly includes conversion of money where a separate consideration is charged.
- Brokerage, management, advisory and custodian fees are taxable at 18%.
- Interest on loans and deposits is exempt; processing and documentation charges are not.
- Numismatic currency is outside "money" and is therefore goods.
- For Rule 42 and 43, the value of a security is taken as 1% of its sale value in exempt turnover.
Read next
- "In the Course or Furtherance of Business" — The Undefined Test
- Actionable Claims Under GST
- ITC Reversal Under Rules 42 and 43
- GST on Financial Services
Disclaimer: Positions stated as on 5 September 2026, based on ICAI Background Material on GST, Volume I (2026 edition).