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Gst provision on direct selling

03 July 2017

A Pvt Ltd. company engaged in Direct Selling business. It has product sale of garments and for that it is collecting a price of Rs.1500/- from its members. My query is when the company will distribute commission to its members under Direct selling business what will be GST on this service beside GST on product sale. The company is not taken any other charges beside the product sale value of Rs.1500/-. Commission is paying to members on surplus generated to company. What will be SAC and any requirement of invoicing for this commission. It is urgent, so help to provide your comments at an early.... apurba.m

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3 Replies

Ravi SADhiyan (Practice) (4510 Points)
Replied 03 July 2017

Company should be charged gst on commision also

apurba mukherjee (FCA) (27 Points)
Replied 06 July 2017

Raviji,

Thanks for your reply.. In that case whether a cascading effect will be there as company is charging Rs.1500/- and paying GST. Commission is paying from its profit generation. Suppose a member puchase company product by Rs.1500/- . Company will have Rs.75/- as GST on textile product. If GST on commission will have to pay then again tax liability is imposing on Prime sale value of Rs.1500/- . Please confirm whether GST will be charged on Commission paid and how much..

apurba

vishavjeet ahuja (icai) (23 Points)
Replied 08 March 2019

According to me it should be composite supply . Principal supply is supply of goods directly to customers in which co is taking service from networker . So gst will be levied on goods only. Networker will be liable to pay only income tax on commission earned.