Hi, A. Is GST applicable for intermediary commission (in USD) received from a foreign buyer for facilitating their purchase from another foreign supplier (Both Parties are outside of India). I would claim the commission against an invoice issued from India. B. As a lead intermediary the buyer pays the commission for all intermediaries combined into my company account (Private Limited Company) and I have to further disburse it to the sub-line of intermediaries. This is against a invoice from them with 18% GST for such services provided to my company by them after deducting TDS. The Question 1, is the Income Tax Liability is calculated after the payout on the net amount (commission or fee retained). Question 2, Is there a chance of automatic deduction of Income Tax on the received amount, before I could disburse sub-line commissions. C. If few of the sub-line intermediaries (Whom I need to pay) are located outside of India for the commission received in Point A. If I have to pay in the same currency (USD) as received by my company. What are the implications of GST and Income Tax
A. Yes GST @18% is applicable.
B1. Income tax is payable on net profit of the company. All the expenses including commission paid to sub line agents is deductible.
B2. Might be WHT will be deducted by the foreign co. on total commission. You can claim the same as TDS under DTAA provisions.
C. Under GST, IGST will be payable due to import of services. Under Income tax, TDS would be deductible u/s 195 and filing of Form 15CB and 15CA will be required.
Hi
A. GST @18% shall be applicable on this transaction. This won't be considered as export of services.
B1. Income tax shall be payable on net profit after deduction of commissions paid.
B2. There won't be automatic deduction of income tax in India.
You can claim ITC of GST charged by sub-intermediaries.
C. Under income tax, it would be available as deduction. Applicability of TDS provisions shall have to be checked after understanding the entire model. 15CA/CB shall have to be filed accordingly.
Under GST, you will have to pay GST on reverse charge basis and then claim it's ITC.
Ensure that all the sub-intermediaries, Indian as well as foreign, raise an invoice on you for their commission.
Hi
A. Yes GST @ 18% will be applicable.
B.1. Income tax is levied on net profit i.e after deduction of all expenses.
C. For income tax purpose it will be consider as expenses. Section 195 of the Income Tax Act, 1961 lays down provisions for tax deductions for Non-Resident Indians (NRIs). This section focuses on tax rates and deductions on daily business transactions with a non-resident. Any amount generated through these business transactions is chargeable under Income Tax Act, 1961. This amount may or may not be income or profits. The certificate for remittance is compulsory. You need to deduct TDS.
Section 195 of Income tax act, 1961 mandates the deduction of Income tax from payments made to Non Resident. The person making the remittance to non – resident needs to furnish an undertaking (in form 15CA) accompanied by a Chartered Accountants Certificate in Form 15CB.
We can assist you in this regard.
In GST you need to do reverse calculation. You can also claim ITC on same.
For more details discussion please have a phone consultation.
Dear Sir,
Hope you are doing well !!
A.The commission income so earned is subjected to GST@18% and all the provisions of GST law is applicable accordingly.
B1. Income tax will be applicable on net profit after claiming all the related expenses for the same.
B2. TDS might be deducted on commission income.
You shall be able to claim credit of taxes paid in foreign. That is called Foreign tax credit.
You will have to file form 67 before filing of income tax return.
c. Under GST, you need to pay GST on reverse charge basis and claim ITC.
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.
Under Income tax, apart from tds, form 15CA & 15CB would be applicable subject to certain conditions.
We may assist you in entire procedure.
It is advisable to take a phone consultation for detailed discussion.
Hello,
A. Yes, GST would be applicable.
B. 1. Income Tax would be applicable to the net income from the commission business. Deduction of commission to sub intermediaries would be available. Under GST, credit of GST charged by sub intermediaries would be available.
2. No automatic deduction of income tax.
C. Under GST, you would be liable to pay GST on a reverse charge basis for the import of services. The credit of Such GST on the RCM basis would be available. Under Income Tax, TDs deduction would be applicable. Form 15CA/CB compliance would be required.
I hope this answer satisfies your requirements.
Regards,
CA Hunny Badlani
Hi, Thank you for your responses. Please clarify the below information. Isn’t in pertaining to my query. What are your views? Government of India Ministry of Finance (Department of Revenue) Notification No. 20 /2019- Integrated Tax (Rate) New Delhi, the 30th September, 2019 (c) after serial number 12A and the entries relating thereto, the following serial number and entries shall be inserted, namely: - 1. 12 AA 2. Heading 9961 3. Services provided by an intermediary when location of both supplier and recipient of goods is outside the taxable territory. 4. Nil 5. Following documents shall be maintained for a minimum duration of five years: 1) Copy of Bill of Lading 2) Copy of executed contract between Supplier/Seller and Receiver/Buyer of goods 3) Copy of commission debit note raised by an intermediary service provider in taxable territory from service recipient located in nontaxable territory 4) Copy of certificate of origin issued by service recipient located in nontaxable territory 5) Declaration letter from an intermediary service provider in taxable territory on company letter head confirming that commission debit note raised relates to contract when both supplier and receiver of goods are outside the taxable territory”;
Yes, this is applicable to your transaction. GST would not be applicable provided you maintain all documents as stated in point 5 of the notification. Such documentation is generally not available with the intermediary.
If you have all the documents available, such services will be exempt.
Yes, your understanding is correct.
If you have all said documents, your services would be treated as exempt.
According to the notification it shall be exempt even though the place of supply would be India.
Your company is making the payment to them so TDS would be deducted on their individual payout by your company.
I think if you could reframe your question I'll be able to assist you.
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Thank you
Yes, this is applicable to you. If you are able to maintain all the mentioned documents, your services would be treated as exempt.
Hi
Yes this is exempt Your understanding is absolute correct.