Clarification on taxability of shares held in a subsidiary company by the holding company.
Circular No. 196/08/2023-GST dated 17th July 2023 Representations have been received from the trade and field formations seeking clarification on certain issues 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. In order to clarify the issue and to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred bysection 168 (1) of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as “CGST Act”), hereby clarifies the issues as under: Taxability of share capital held in subsidiary company by the parent company Si NoIssueClarification1Whether the activity of holding shares…