• Commission on indenting from foreign company for services provided outside of India

Dear Sir/Ma’am,

I am selling agent of scrap steel materials for Companies located outside of India, they do not have any company or office in India. 

I sell for them to steel mills in Bangladesh. Pakistan, Taiwan, Malaysia. I do not sell to Indian steel mills. 

I receive commission in USD in my personal bank account but the commission amount is lower than INR 4 million. 

Am I liable to pay GST, paying Income tax as usual. 

Kindly advise. 

Best Regards 
Subrata
Asked 4 months ago in GST

Hii 

 

In your case 

this seems to be export of services for which you are getting commission 

 

thus gst is applicable however you have 2 options 

 

1 pay IGST and claim refund 

2 file LUT and need not pay igst and claim refund of taxes paid for rendering service 

 

but if 

this is overseas sales means purchase from 1 country and sales to another country then no gst applicable 

 

thus if this is commission gst applicable 

if this is sale purchase gst not applicable 

Lalit Bansal
CA, Delhi
749 Answers
54 Consultations

5.0 on 5.0

Dear Sir,

 

Any person who falls under the definition of an agent is required to obtain GST registration. The threshold limit condition for registration does not apply to commission agents; therefore you are required to take registration and comply with the provisions.

 

Further in your case the transaction would not be treated as an export of service since in case of intermediary services, the place of supply shall be the location of the supplier; and 1 key condition for a service to qualify as export is that the place of supply should be outside India.

Further since the place of supply is your location only, the transaction would be treated as local and therefore you would be required to pay CGST & SGST @ 18% and not IGST.

 

Please advise in case of any other clarification.

 

Thanks & Regards,

CA Aditya Dhanuka.

 

P.S. - The facts have been understood correctly, and my opinion stands in original as given.


Hope now you have understood that not only did I read your question properly, but the solution provided was also apt.

 

Please advise in any case of any other clarification.

 

Thanks & Regards,

CA Aditya Dhanuka.

Aditya Dhanuka
CA, Kolkata
37 Answers
2 Consultations

5.0 on 5.0

Hi 

It won't be classified as export of services and hence GST would be applicable.

However, these services won't be liable to GST provided certain documents are maintained for each sale transaction.

Refer Notification No. 20 /2019- Integrated Tax (Rate) dated 30 sep 19 - page 2 for details of documents to be maintained.

If such documents are not maintained, the commission services shall be liable to GST.


These services are classified as intermediary services. For intermediary services, place of supply is always place of service provider ie. You. So place of supply would be in India.

 

Place of supply in India breaches the conditions for classification as zero rated supply.

Lakshita Bhandari
CA, Mumbai
5590 Answers
684 Consultations

5.0 on 5.0

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.

 

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

Payal Chhajed
CA, Mumbai
5136 Answers
194 Consultations

5.0 on 5.0

- It appears that you are only acting as an intermediary for foreign purchaser and seller. We still need copy of your agreement to arrive at proper conclusion in respect to services provided by you. In case of intermediary services, place of supply is location of supplier of services which makes the supply as "intra-state supply" resulting into levy of CGST and SGST. Notification no. 20/2019 read with notification no. 09/2017 exempts "inter-state supplies" only. As the commission amount is more than Rs.20 lacs, you are liable to obtain GST registration and pay taxes and file returns.

- It is not an export of services as the place of supply is in India.

Vivek Kumar Arora
CA, Delhi
4279 Answers
428 Consultations

5.0 on 5.0

Yes, GST shall be attracted at 18% in case of intermediary services. (Ref. Section 2(13) of CGST Act and Sec. 13(8) of IGST Act)

For Intermediary services, GST law creates a fiction where Place of supply will be deemed to be location of supplier (i.e. India in your case) and hence, GST shall be applicable. Moreover, as you are a service provider, limit of GST registration shall be INR 20 lakh.

 

Thanks and Regard,

CA Amit Aggarwal

Amit Aggarwal
CA, New Delhi
23 Answers

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