Gst on commission

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

19 January 2018 Dear Experts,

we are under regular dealer.

we purchases product of is 100/-
and we sale such product of Rs 100/- (same on purchases price), No profit we taken on any sales.
and we claim ITC on purchases, so we not pay GST.
But
my seller provide me 10% commission on purchases cost as incentive.
and deduct TDS on such commission.

my question is on such commission GST levy or not.

my nature of business is Trading only as per GST Registration.

CA S K MISHRA

CA S K MISHRA (Expert)
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19 January 2018 Yes, GST payable.
For expert knowledge, refer following links
https://www.amazon.in/dp/194832105X
https://www.infibeam.com/Books/indirect-tax-laws-part-i-goods-services-tax-s-k-mishra/9781642490305.html

Querist : Anonymous

Querist : Anonymous (Querist)

19 January 2018 but our nature of business only sales and purchases. we received commission as a name of incentive and tds already deduct by seller.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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27 July 2024 Let's address your situation step by step:

### Scenario Overview

- **Nature of Business**: Trading (Sales and Purchases)
- **Purchase Cost**: ₹100 (no profit on sale, so sale price is also ₹100)
- **Incentive**: 10% commission on purchase cost (₹10)
- **TDS Deducted**: Yes, TDS is deducted on the commission by the seller

### GST on Commission

1. **Is GST Applicable on the Commission?**

Yes, GST is applicable on the commission or incentive received. Even though your primary business is trading and you have no profit on your sales transactions, the commission received from the seller for your services is considered as a separate supply of service and thus falls under GST. The fact that the commission is considered an incentive does not change its nature as a taxable service.

2. **GST Rate on Commission:**

The standard GST rate applicable to commission or service fees is 18%. However, you should confirm this rate with the latest GST notifications or consult a tax professional for precise rates.

3. **GST on Commission Billing:**

You should issue a GST-compliant invoice for the commission received. The invoice should include:
- Your GSTIN
- Details of the commission received
- The applicable GST rate (18% in this case)
- The GST amount charged

4. **Claiming ITC:**

Since the commission received is a taxable supply, you can claim Input Tax Credit (ITC) on the GST paid for the commission, provided it is used in the course of your business. Make sure to keep the invoice for your records and to claim the credit.

5. **TDS and GST:**

The TDS deducted on the commission does not affect the GST liability. You need to account for the GST on the commission separately. TDS is related to income tax compliance, while GST is a separate tax liability.

### Example Calculation

- **Commission Received**: ₹10
- **GST @ 18%**: ₹1.80
- **Total Invoice Amount**: ₹11.80 (₹10 + ₹1.80)

You should issue an invoice to the seller for ₹11.80 (₹10 commission + ₹1.80 GST).

### Summary

In summary, even though your primary business is trading with no profit on sales, the commission you receive is subject to GST. You need to account for GST on this commission, issue a compliant invoice, and can claim ITC for the GST paid. The TDS deducted on the commission is separate from your GST obligations.

If you have more specific queries or need personalized advice, consulting a GST practitioner or tax advisor is always a good idea.

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