• GST on commission received from abroad

Hello,

I have a sole proprietorship company in New Delhi and receive commission as agent of foreign company. Here is how it work:

-	A foreign company, which does not have any entity in India, let’s call it F, appoints me as an agent.
-	I visit companies in India who are interested in the products of company F. 
-	 et’s say company A wants to buy product/services from company F. 
-	Company A will place order directly with company F and company F will ship to company A. 
-	Company F will send me commission to my bank account. 

Questions Part 1:

-	Will I come under the INR 20 lahks per year exemption slab?
-	If yes then will it be from 1st of April 2017 or from 1st of July 2017? 
-	If not then do I have to pay GST for commission received before 1st of July 2017 or I can use the earlier service tax exemption of INR 10 lakhs?

Questions Part 2:

-	Let’s say the company F send me US$100 (just a figure) for marketing, like participating in trade show etc
-	Out of this US$100 let say US$70 is spend for promotion of company F. So I am left with US$30. So do I have pay GST on US$100 (total amount received) or US$30 (which is left). The US$70 I have spend also includes the GST for Expo or business promotion and have the bill. 

Thank you,
Best Regards,
SH
Asked 6 years ago in GST

Dear Sir,

Please find answer :

Answer 1 :-

- No you have to take registration from very first amount

- Earlier Service tax exemption shall stand valid till 30.06.17 but from first july every transaction shall be taxable.

Answer 2 :-

- Sir in such case GST is payable for total value of US$ 100 & you can claim credit of expenses US$ 70.

Vishrut Rajesh Shah
CA, Ahmedabad
928 Answers
38 Consultations

5.0 on 5.0

This query is specifically addressed to another expert.

B Vijaya Kumar
CA, Hyderabad
1001 Answers
124 Consultations

5.0 on 5.0

Hello Sahil,

I assume that the query is specifically for Vishrut and is answered by him.

Please let me know if any part of it is left unattended.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Rohit R Sharma
CA, Mumbai
2104 Answers
95 Consultations

5.0 on 5.0

Hi,

1. I dont think limit of 20 lacs will be applicable to you. You will have to take registration even below 20 lacs.

2. NA

3. You have to pay GST. You cant use earlier ST exemption.

Other part

You have to pay GST on entire purchase of 100 and you can take input of 70 paid by you to your vendors.

Please feel free to call/ revert in case of any doubts

Thanks and Regards

Abhishek Dugar

CA CS B.Com

Abhishek Dugar
CA, Mumbai
3576 Answers
183 Consultations

4.8 on 5.0

Hello Sahil,

AS far as I have understood your arrangement, Company A is buying from Company F in that case the importing company will be paying Customs Duty as well as IGST on the imports, it has nothing to do with you.

When we talk about your commission, whatever amount you receive from the Foreign Company as Commission is chargeable to GST as the service is provided in India.

Your third case is when the foreign company remits you funds to organise events, then it is very difficult to prove that is it a mere case of reimbursement of expenses or includes operating expenses and fees as well. It can be very easily disputed and may involve litigation. The government will obviously expect you to pay GST on the amount transferred unless you pay the bill first from your own pocket and the company re-imburses you bill by bill at a later date.

Trust this clarifies your query.

Feel free to call / get back in case of further clarifications.

Thanking You.

Regards,

Rohit R Sharma

BCOM, ACA, LLB-GEN, CERT. FAFP

Rohit R Sharma
CA, Mumbai
2104 Answers
95 Consultations

5.0 on 5.0

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