GST liability

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This discussion clarifies GST liability for a proprietorship concern that uses individual agents for collection and recovery services. The key point is that Reverse Charge Mechanism (RCM) is generally not applicable to the organisation for commissions paid to its agents, as RCM applies when the agent provides services directly to a bank or NBFC. Instead, the agents themselves are typically required to obtain GST registration, irrespective of their turnover, if they act as commission agents. If agents are not registered and do not raise invoices, the organisation is not liable for GST on their behalf, though the agents will face consequences for non-compliance.

Madhab Chandra Mandal

Madhab Chandra Mandal (Querist)
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18 February 2021 Dear Sir,
My organisation is a proprietorship concern doing collection and recovery job from banking & non banking organisation. Our client paid GST under RCM. we have appointed few individual agent for collection and recovery on commission basis. Commission would be within 10,00,000 of each individual in any financial year. are we liable to pay GST under RCM of my agents ?

Our agents are liable to make GST registration ?

Please reply.

CA. Aditya Goel

CA. Aditya Goel (Expert)
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18 February 2021 RCM only applicable when recovery agent providing services to Bank or NBFC, else not
in your case no RCM liability on you
your agents needs to take GST registration if their turnover/receipts is more than 20 lakhs p.a. (subject to certain states)
hope this clarifies
if you need any help with GST/Accounts/Income tax, you may contact me
CA. Aditya Goel
ag@caadityagoel.in

Madhab Chandra Mandal

Madhab Chandra Mandal (Querist)
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20 February 2021 Dear Sir,
A Commission Agent is required to obtain Compulsory Registration u/s 24(vii) of CGST Act, irrespective of its turnover. Thus, the threshold limit of Rs.20 lakh as enunciated in section 22(1) of CGST Act, does not apply to an Agent.
This provision will not apply to our agent ?

CA. Aditya Goel

CA. Aditya Goel (Expert)
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22 February 2021 Yes, Correct - mandatory registration for Commission agents.
they will charge GST while billing to you and hence no RCM applicable on you
you will not charge GST while billing to bank/NBFC as RCM applicable on them
hope this clarifies.

Madhab Chandra Mandal

Madhab Chandra Mandal (Querist)
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03 March 2021 Thank you so much sir for reply to my query. Some of our agents have not taken GST registration. Even they do not raise invoice. We paid commission to them as per our calculation. Commission is Rs.25000 – Rs.30000 p.m. (approx.)
Are we liable to GST dept. for non registration of our agents ?

CA. Aditya Goel

CA. Aditya Goel (Expert)
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03 March 2021 No, its the responsibility of Agents to get registered and they will face the consequences if they are not.
I dont see any default from your end. Unless they charge GST or unless RCM applicable on you, you are not liable to pay GST.
in case you have further queries please reach out to me @ Nine 8 7 3 3 7 7 7 02 and also you may ask your agents to call me to advise them and help with their compliances.

Madhab Chandra Mandal

Madhab Chandra Mandal (Querist)
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27 April 2021 Sir , I have booked Commission in Tally on 31st March 2021 on due basis but to be paid on 29th April 2021. Which TDS rate is applicable 3.75% or 5% . Please Advice

CA. Aditya Goel

CA. Aditya Goel (Expert)
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27 April 2021 for transactions due till 31st march - 3.75%. even if you make the late payment rate of TDS will remain same although you will have to pay the interest.

Madhab Chandra Mandal

Madhab Chandra Mandal (Querist)
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27 April 2021 Ok sir. Thank you very much

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