Page 37 - GSTL_2nd July 2020 _Vol 38_Part 1

2020 ] COMPONENTS OF AGGREGATE TURNOVER UNDER GST J11
Rental income on Commercial Property
The transaction of rental/lease of commercial property amounts to sup-
ply; applicant receives periodical income towards the impugned supply of ser-
vice and the same is in the course or furtherance of business and hence the said
transaction amounts to supply in terms of Section 7(1)(a) of CGST Act, 2017.
Thus, it is a taxable supply of service having SAC 997212 and therefore the value
of such supply is to be included in the aggregate turnover, for registration.
Rental income on residential property
The transaction of rental/lease of residential property amounts to sup-
ply; applicant receives periodical income towards the impugned supply of ser-
vice and the same is in the course or furtherance of business and hence the said
transaction amounts to supply in terms of Section 7(1)(a) of CGST Act, 2017.
However, “Services by way of renting of residential dwelling for use as resi-
dence, classified under SAC 997211” are exempted from the tax (GST) in terms of
Entry Number 12 of the Notification No. 12/2017 dated 28-6-2017 and according-
ly the impugned supply of service of renting of residential property becomes an
exempted supply. Aggregate Turnover includes the value of the exempted sup-
plies. Therefore, the income received by the applicant towards rent of residential
property is to be included in the aggregate turnover.
Life insurance policies, dividend on shares and capital gain/loss on sale
The applicant is also in receipt of income out of maturity proceeds of life
insurance policies, dividend on shares and capital gain/loss on sale of term ‘Se-
curities’, which has the same meaning assigned to it as in clause 2(h) of Securities
Contracts (Regulation) Act, 1956, and in terms of Section 2(101) of CGST Act,
2017, includes shares, scrips, stocks, bonds, derivative instruments etc., that have
been explicitly excluded from the purview of GST, by virtue of its exclusion from
the definition of ‘goods’ and ‘services’, as contained in Section 2(52) and Section
2(102) of the CGST Act respectively. In the instant case the dividend on shares,
capital gains/losses on sale of shares are relevant to the shares (securities) and
the income earned in this relation is an application of money. Therefore, this in-
come earned out of shares, being excluded from the definition of goods or ser-
vices, gets excluded from the said definition of goods/services. Therefore, they
are not relevant to the aggregate turnover and hence are not required to be add-
ed to the aggregate turnover for registration under the provisions of GST Act.
The applicant is also in receipt of income out of maturity proceeds of life
insurance policies. The impugned income would be received on maturity of the
insurance policies i.e. on closure of the insurance contract consequent on maturi-
ty of the said policies. The insurance premium of policies is taxable under GST,
being the consideration for the services provided by the insurance companies.
On completion of the said contract/maturity of the policy, there would not be
any service involved between the policy holder and the insurance company.
Therefore, the amounts received on maturity of the insurance policies are not
relevant to the aggregate turnover and hence are not required to be added to the
aggregate turnover for registration under the provisions of GST Act.

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GST LAW TIMES  2nd July 2020  37