Applicability of GST on commission earned abroad

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This discussion clarifies the Goods and Services Tax (GST) treatment for commission earned by an Indian individual on professional services rendered to foreign entities for sales deals between two overseas parties. The consensus is that GST is applicable under the reverse charge mechanism, meaning the Indian recipient of the commission is liable to pay the tax. While exports are generally zero-rated, intermediary services provided by Indian suppliers to foreign principals are subject to GST.

Debashish Sen Gupta

Debashish Sen Gupta (Querist)
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01 September 2023 Please let me know the GST treatment on commission earned by an Indian individual on the professional services provided for arranging a sales deal the transaction happened between two foreign entities and the actual sale and transfer of goods happened abroad. Actual buyer and seller are in abroad. Thanks

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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01 September 2023 The recipient of the commission is liable to pay GST under reverse charge mechanism. The reverse charge mechanism is a mechanism where the recipient of the service is liable to pay GST instead of the supplier. In the case of commission payments made in foreign currency, the GST liability falls on the recipient.

Debashish Sen Gupta

Debashish Sen Gupta (Querist)
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04 September 2023 I think the export of goods or services is considered as a zero-rated supply. GST will not be levied on export of any kind of goods or services. My query is similar to this as the commission which will be earned/received will be in foreign exchange will come from foreign bank to Indian bank for the sales related services. Services will be provided to two entities which are not of Indian Origin. Kindly confirm the GST applicability. Thanks

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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04 September 2023 In the GST regime, intermediary services by Indian suppliers to foreign principals are taxed to GST. In common parlance, any person who enables the supply of goods/services between two persons, is considered as intermediary.

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