Commission income received to facilitate a deal

Dear  Sir,

Hope you are doing well !!

As per my understanding, your services fall under the category of intermediary services, place of provision of services will be place of service provider (I.e. India)

Definition of intermediary is contained under section 2 (13) of Integrated Goods and Service Tax Act, 2017 and the same is reproduced here under for ready reference ;

“intermediary means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account”

As per Section 13 (8) (b) of the same Act, the place of supply of “intermediary services” shall be the location of the supplier of services. Therefore, the supply of the intermediary service is in the taxable territory and so the service is taxable and as a service provider, you have to discharge the tax liability.

-GST registration is mandatory for intermediary services without any threshold limit.

-Intermediary generally charge commission against the services provided by them.

-The commission income so earned is subjected to GST@18% and all the provisions of GST law is applicable accordingly.

- You need to issue an invoice to the company. If they are paying you a fixed amount and not paying GST in addition, you simply need to do reverse calculation of GST according to the amount so received.

-If you are working as sole proprietor (which is better then company) then income tax would be calculated on slab basis and not on flat rate i.e. 30%.

- Basically GST is a collection from customer and not from own pocket.It is upto you how to collect it from customer either by increasing the commission amount or charging GST separately on the current commission.

-In case there is no commission for a particular period, you will have to file NIL returns. GST shall have to be paid for the month in which invoice is made OR payment is received- whichever is earlier.

We have handled such cases before. We may assist you in entire procedure.

It is advisable to take a phone consultation for detailed discussion.

Hi,

1.Yes, GST is applicable if your commission income is more than 20 lacs (or if you are already registered in gst).

2. It would not tantamount to export od services. In case of brokerage, place of provision of supply is considered to be the place of service provider (i .e India in your case).

3. @18% on commission

4. No. But if you receive services from outside India, then RCM will be applicable.

5. No

However, this transaction can be structured in a better way so that there is no gst liability. Please feel free to take phone consultation for detailed discussion on it.

Hi

1.Yes you need charge because your service will covered under intermediary services.

Hello,

1. Yes, GST is applicable.

2. No, it won't qualify as export of service. The place of supply would the location of the service provider.

3. The applicable GST rate would be 18%.

4. No.

5. No.

I hope this answer satisfies your requirements. 

Regards,

CA Hunny Badlani

What was the purpose code used to receive the payment?

Was it commission?

Are your total receipt exceeds Rs. 20 lakh?

If answer to above questions is yes you are liable to GST @18% and in case of agent service the place of supply would be place of agent and hence it won't be export and still liable for GST.

No RCM.

TDS applicable only if your turnover above 1 crore.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you

In that case you need to pay GST.

I think the GST would be impacted if the agreement is different with honk Kong party.

I would suggest you to book a phone consultation that would give me a better understanding of your query and you'll get a better answer.

If the taxpayer has gst gst registration, then it will br taxable @18%.

If its a website development, then it will not be liable to gst assuming the money is received in foreign currency and you have FIRC.

Hi

Yes GST will be charged @ 18%in this situation.

You need charge the same.

In case  the transaction was web site development or maintenance service to only Honk Kong party then you need not charge GST of you earn foreign currency & have FIRC.

Hi

Yes GST will be charged @ 18%in this situation.

You need charge the same.

In case  the transaction was web site development or maintenance service to only Honk Kong party then you need not charge GST if you earn foreign currency & have FIRC.

Since the taxpayer has GST registration, it will be taxable @18%.

If the transaction was web site development or maintenance service, then it can be consdiered Export Services subject to fulfillment of other conditions for Export Services.

Dear Sir,

Gst will be applicable on the commission received in foreign currency @ 18% as it is considered as export of services.

Section 9(3) of CGST Act, 2017 provides categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis. Your case doesn't fall within the purview of that list and hence RCM is not applicable.

Regards 

Shiv Kumar Agarwal