Priority lending certificates come under 18 per cent GST: Government

NEW DELHI: The government has clarified that priority lending certificates of banks are in the nature of goods and liable to tax at the rate of 18% under GST.

Experts say by extension things like bitcoins, carbon credits, etc. could become taxable under the GST.

“It has also been clarified that priority sector lending certificates are subject to GST as 'goods' which could have ramifications on things like bitcoins, carbon credits etc,” said Pratik Jain, partner and leader-indirect tax, PwC.


In a circular issued on Thursday, the department of revenue said the RBI FAQ on Priority Sector Lending Certificate or PSLC may be construed to be in the nature of goods, dealing in which has been notified as a permissible activity.

“In GST there is no exemption to trading in PSLCs. Thus, PSLCs are taxable as goods at standard rate of 18% under the residuary,” the circular said.

It says PSLC are akin to freely tradeable duty scrips, Renewable Energy Certificates, REP license or replenishment license, which attracted VAT. It means that such things also become taxable under GST. Similarly, bitcoins are traded on exchanges but are not in the nature of securities. In that sense, they will be traded as goods and taxed accordingly.