GST and Duty-Credit Scrips: the HSN 4907 Exemption, the Fee, and Net Realisation

The two things GST sees

When you sell a scrip on an exchange, GST looks at two separate transactions: the sale of the scrip itself, and the service fee charged for arranging the trade. They are not taxed the same way, and keeping them straight is what keeps your books clean.

The scrip sale is GST-exempt under HSN 4907

Duty-credit scrips are classified under HSN 4907, and their sale or transfer is exempt from GST at S. No. 137 of Notification 10/2025-Central Tax (Rate), issued on 17-09-2025 in supersession of Notification 02/2017-Central Tax (Rate) and in force from 22-09-2025. So when you sell a RoDTEP or RoSCTL scrip, no GST is charged on the scrip value itself. This is what makes a scrip so clean to trade: the buyer pays for the scrip, you receive that value, and there is no GST layered on top of the instrument. The identical entry sits at S. No. 137 of Notification 10/2025-Integrated Tax (Rate) for an inter-state transfer.

Which notification applies depends on the date of the transfer

Statute vintage follows transaction vintage, and this exemption has lived in two instruments since it was first inserted, so a scrip transferred in one window is not cited the way one transferred in another is. The chain, oldest first:

• A transfer before 13-10-2017. No exemption entry existed yet. Entry 122A entered Notification 02/2017-Central Tax (Rate) only on 13-10-2017, so a transfer in the first months of GST was taxable under the rate schedule in force on its own date. This page does not restate those superseded schedules; if you are reopening a 2017 transfer, read the rate notification as it stood on that day.
• A transfer from 13-10-2017 to 21-09-2025. Exempt. The citation is S. No. 122A of Notification 02/2017-Central Tax (Rate), G.S.R. 674(E), inserted by Notification 35/2017-Central Tax (Rate) dated 13-10-2017, G.S.R. 1284(E), and unamended until supersession. The inserted entry reads, in full: 122A, 4907, Duty Credit Scrips.
• A transfer from 22-09-2025. Exempt. The citation is S. No. 137 of Notification 10/2025-Central Tax (Rate). The supersession is expressed as being "except as respects things done or omitted to be done before such supersession", which is why the older entry still governs the older transfer rather than being erased by the newer one.

The effect is the same in both directions: the transfer of the scrip is exempt. What changes is the entry your accountant cites, and citing the current one against a transfer that happened under the old one is the error worth avoiding. Booking the entries themselves is covered in how to book a scrip sale or purchase in your accounts.

The Scriphouse fee carries 18% GST

The service of arranging and settling the trade is taxable. Your first trade is free, so on that one there is no fee and therefore no GST on it. After that the standard fee is 0.40% of the value that settles, charged only when a trade settles, and that fee carries 18% GST like any professional service. The GST applies to the fee alone, never to the scrip value. The full arithmetic sits on the pricing page.

Does selling scrips force you to reverse input tax credit?

This is the question sellers with real GST registrations actually worry about, and it is the one most published explainers answer wrongly or skip. The worry is legitimate in shape: Section 17(2) of the CGST Act, 2017 provides that where inputs are used partly for taxable and partly for exempt supplies, credit is restricted to the input tax attributable to the taxable side, and Rule 42(1)(i) of the CGST Rules, 2017 works that restriction out by formula, attributing common credit in the ratio of exempt turnover to total turnover. A scrip sale is an exempt supply, so on that reading a season of scrip sales would swell your exempt turnover and force a proportional reversal of common credit.

The reading is out of date, and the correction has an instrument. Explanation 1 to rule 43, which governs both rule 42 and rule 43, lists what the aggregate value of exempt supplies excludes for exactly this computation, and Notification 14/2022-Central Tax dated 05-07-2022 inserted clause (d) into that list: the value of supply of Duty Credit Scrips. So for any tax period from 05-07-2022, the value of scrips you sell does not enter the exempt-turnover figure at all, and selling scrips forces no reversal of common credit on their account.

A worked shape, to make the mechanics concrete. Say a tax period carries Rs 50,00,000 of total turnover in the State, of which Rs 10,00,000 is scrip sales, and Rs 1,00,000 of common credit. Read without the exclusion, the formula would attribute one fifth of the common credit, Rs 20,000, to exempt supplies. With clause (d), the Rs 10,00,000 never enters the exempt-supply value, so with no other exempt supplies in the period the attribution on account of the scrips is zero.

• From 05-07-2022. No reversal on account of scrip sales: clause (d) of Explanation 1 to rule 43, inserted by Notification 14/2022-Central Tax, excludes the scrip value from exempt supplies for rules 42 and 43.
• 13-10-2017 to 04-07-2022. The exclusion did not exist yet, so an exempt scrip sale in that window did enter the exempt-supply value, and the rule 42 attribution applied to it. A dispute about an old period is argued on the text in force then, not on today's.
• What this does not settle. Your own registration's position, other exempt supplies you make, and whether the GST on the exchange fee is available to you as credit all remain your accountant's read, as the accounting guide says in more detail.

What the paperwork of a scrip sale looks like

The two-transaction split shows up in the documents themselves, which is the cleanest way to see it. Section 31(3)(c) of the CGST Act, 2017 provides that a registered person supplying exempted goods issues a bill of supply instead of a tax invoice. So a scrip sale produces:

• Your bill of supply to the buyer, for the scrip: description of the scrip, HSN 4907, the sale value, and no tax charged, because the supply is exempt under the entry in force on the transfer date.
• Scriphouse's tax invoice to you, for the service: the fee on the settled value, plus 18% GST on that fee alone. This is the only GST in the whole trade.

What the net-realisation statement shows

Every trade ships a GST invoice and a net-realisation statement, and the statement is written for your accountant, not just for you. It sets out the scrip value received, the fee, the 18% GST on that fee, and your take-home, on one page. Because the scrip line and the fee line are separated, your finance team can post each correctly: the exempt sale on one head, the taxable service and its GST on another, with the input tax credit on the fee available in the usual way. No reverse-engineering from a single blended figure.

Why this matters for a broker or a CFO

Duty-credit scrips move real money, and mixing an exempt sale with a taxable service on the books is exactly the kind of thing that turns an audit long. Because Scriphouse itemises the two and ships a GST invoice plus an audit pack per trade, the treatment is legible from the record. If you run many client IECs from one desk, the same clean split repeats on every trade, so reconciliation stays a routine rather than a project.

What this is not

This is a plain-English explanation of how GST applies to scrip trades on Scriphouse, not tax advice for your specific books. Classification and notifications can be read alongside your own position, and your accountant remains the right person to sign off on posting. What Scriphouse guarantees is that the paperwork behind each trade, the GST invoice, the net-realisation statement, and the audit pack, is complete and consistent. Read how a scrip sale is priced and settled to see where the fee sits, and if you buy as well as sell, how a bought scrip is kept clean. The compliance page sets out what ships with every trade.

Frequently asked questions

Is the sale of my scrip a taxable supply?

No. Duty-credit scrips are classified under HSN 4907 and their sale or transfer is exempt from GST at S. No. 137 of Notification 10/2025-Central Tax (Rate), in force from 22-09-2025. No GST is charged on the scrip value itself. GST applies only to the exchange fee for arranging the trade.

Which notification do I cite for an older transfer?

For a transfer on or before 21-09-2025 the citation is S. No. 122A of Notification 02/2017-Central Tax (Rate), inserted by Notification 35/2017-Central Tax (Rate) dated 13-10-2017. From 22-09-2025 it is S. No. 137 of Notification 10/2025-Central Tax (Rate), which superseded it. The treatment is the same, the entry cited is not.

Does the Scriphouse fee carry GST?

Yes. The service fee carries 18% GST, like any professional service. Your first trade is free, so on that one there is no fee and no GST on it. The standard fee after that is 0.40% of the value that settles plus 18% GST, charged only when a trade settles.

What paperwork do I get for my accounts?

Every trade ships a GST invoice and a net-realisation statement that separates the exempt scrip value from the taxable fee and its GST, plus an audit pack. Your finance team can post the exempt sale and the taxable service on the correct heads without reconstructing anything from a blended number.

What is the HSN code for duty credit scrips?

HSN 4907, the heading for documents of title. The sale of a duty credit scrip under that heading is exempt from GST under S. No. 137 of Notification 10/2025-Central Tax (Rate), effective 22 September 2025; a transfer dated earlier cites the exemption entry in force on its own date.

Does selling duty credit scrips require ITC reversal under Rule 42?

Not since 05-07-2022. Notification 14/2022-Central Tax inserted clause (d) into Explanation 1 to rule 43 of the CGST Rules, 2017, which excludes the value of supply of Duty Credit Scrips from the aggregate value of exempt supplies used in the rule 42 and rule 43 computations. Before that date the exclusion did not exist, so an exempt scrip sale did enter the exempt-turnover figure for the period it fell in.

Do I issue a tax invoice or a bill of supply when I sell a scrip?

A bill of supply. Section 31(3)(c) of the CGST Act, 2017 provides that a registered person supplying exempted goods issues a bill of supply instead of a tax invoice, and a scrip sale is exempt. The tax invoice in the trade is the one Scriphouse issues for its fee, which carries 18% GST on the fee alone.