This circular provides clarity on the classification and applicable GST rate on Priority Sector Lending Certificates (PSLCs), Renewable Energy Certificates (RECs), and other similar scrips, in view of differing interpretations arising from earlier FAQs and circulars.

The circular explains that earlier clarifications had treated certain scrips as goods classifiable under heading 4907, attracting GST at 12%, while duty credit scrips under the same heading were later exempted from GST. Subsequently, PSLCs were clarified through another circular as taxable at 18% under the residual entry, which led to confusion regarding the correct GST rate for PSLCs, RECs, and similar instruments.

Upon re-examination, it is clarified that the residual GST rate of 18% applies only to goods not covered under any specific entry in Schedules I, II, IV, V, or VI of the relevant rate notification. If goods are specifically covered under any of these schedules, the GST rate applicable to that entry must be applied and the residual entry cannot be used.

Accordingly, PSLCs, RECs, and other similar certificates are clarified to be goods classifiable under heading 4907 and are liable to GST at the rate of 12%. However, duty credit scrips falling under the same heading continue to attract Nil GST as per the relevant exemption notification.

This clarification modifies the earlier circular to the extent it prescribed 18% GST on PSLCs and brings uniformity in the tax treatment of such certificates under GST.