MCX move opens a rift with gold body

Change in settlement procedure irks top bullion association

- Ram Sahgal

• The change would shield MCXCCL from becoming party to any legal case involving non-grant of input tax credit

Nodal gold trade body India Bullion and Jewellers Association (IBJA) has locked horns with MCXCCL, the clearing corporation of India’s largest commodity derivatives exchange MCX, over a crucial revision in the platform’s settlement procedure for gold and silver contracts traded on the bourse.

The revision puts the onus of collecting goods and services tax (GST) on the seller and buyer, who give and take delivery on the exchange platform. Up until now, MCXCCL would facilitate the payment of GST from buyer to seller through the exchange’s clearing members. However, the clearing corporation last week said beginning on 29 December, the seller must directly collect GST from the buyer.

"As part of the revised settlement process, MCXCCL will facilitate sharing GST details of the buyer with seller. The payment of funds pertaining to tax component of the invoice will have to be done by buyer to seller directly. The buyer/seller clearing member or their associates would be solely responsible for all statutory compliances applicable to their transactions... MCXCCL will not be held responsible or liable for any default due to non-compliance from buyer or seller clearing member or their associates on tax matters," the clearing corporation said in a circular seen by Mint.