SEBI Revises Operational Circular for issue & listing of Debt Securities

Muskan Agrawal

01 Jun, 2024

The security board exchange of India (SEBI) released a circular SEBI/HO/DDHS/DDHS_Div1/P/CIR/2022/0000000152 on November 10, 2022, regarding the Applicability of GST on fees remitted to SEBI revises operational circular for chapter XX for issue & listing of Non-convertible Securities (NCS), Security Receipts (SR), Securitised Debt Instruments (SDI), Municipal Debt Securities & Commercial Paper (CP)^[1]. The provision of this circular shall be applicable to all issuances of debt securities with immediate effect and will replace the previous circular SEBI/HO/DDHS/P/CIR/2021/613, dated 10.08.2021. 

This article helps to understand the new circular SEBI issued regarding the applicability of GST fee remittance.

What is the Applicability of GST on fees remitted to SEBI Revises operational circular of Chapter -XX?

1. Chapter XX of the Operational The circular dated August 10, 2021, regarding ‘Bank account details for payment of fees, enumerates the procedure that must be followed for the payment of fees, as applicable, under the SEBI Regulations, 2021 and the SEBI Regulations, 2008.
2. SEBI vide circular on July 18, 2022, with respect to Levy of Goods and Services Tax (GST) on the fees payable to Market Infrastructure Institutions (MIIs) as informed by SEBI, intermediaries regd. with SEBI and co. that have listed intending to list their securities on the Stock Exchange and individuals dealing in the securities market, the fees and other payable charges to SEBI would become subject to GST at the rate of 18% with respect to July 18, 2022.
3. But, the SEBI revises operational circular the of chapter-XX, and the following amendment is being made regarding bank account details for payment fees of the NCS operational circular:-
   • Paragraph b of the XX chapter shall be replaced with the new one.
   • In the set format, provide the remittance particulars by email immediately after the remittance is made.
4. The provisions of this operational Circular would come into force with immediate effect.
5. The Circular is issued in the exercise of the powers covered in Section 11(1) of the Securities & Exchange Board of India Act (SEBI Act), 1992, peruse with Regulation 55 (1) of the SEBI (Issue & Listing of Non-convertible debt Securities) Regulations, 2021 and Regulation 48 of the SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008, to safeguard the interest of investors within the security market and to promoting the development and regulating the securities market.

What are non-convertible securities?

Non-convertible debentures (NCDs) are financial instruments companies use to raise long-term capital. This is done through a public issue.

NCDs are debt instruments with a fixed tenure, and people who invest in these receive regular interest at a specific rate.

What are the reasons behind to revise the Circular?

This Circular is released in the exercise of the conferred powers under Section 11(1) of the Securities & Exchange Board of India Act, 1992, looking through Regulation 55 (1) of the SEBI Regulations, 2021 and Regulation 48 of the SEBI Regulations, 2008, by the Securities & Exchange Board of India (SEBI) to promote the systematic and healthy rise in the securities market and protection of investors.

Conclusion

The well-defined applicability of GST fees remittance-Revision of the XX chapter for the issue and listing of the non-convertible securities provided in the Circular, which is released by the SEBI (security board exchange of India). SEBI revises operational circular of chapter XX, and a few amendments are being added regarding bank account details for the NCS operational circular payment fees. In addition, the provision of this operational Circular shall come into force with immediate effects. This will be beneficial for the security market, protect the interest of investors, promote the security market’s development, and help to regulate the market smoothly.

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