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As at 10 November 2026, one registered bank sells a Priority Sector Lending Certificate to another registered bank. How is GST on this supply paid?

Question and options

As at 10 November 2026, one registered bank sells a Priority Sector Lending Certificate to another registered bank. How is GST on this supply paid?

  1. By the selling bank, under forward charge

  2. By the buying bank, under reverse charge

  3. By neither bank, as the certificate is a security outside GST

  4. By neither bank, as the supply is exempt by notification

Answer and explanation

Correct answer: B - By the buying bank, under reverse charge

Notification No. 4/2017–Central Tax (Rate), as amended by Notification No. 11/2018–Central Tax (Rate), places the supply of Priority Sector Lending Certificates by a registered person to a registered person under reverse charge under section 9(3) of the CGST Act, 2017, so the buying bank pays the tax. The certificates are treated as goods, not as securities excluded from goods, and the supply is not exempt.

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