sales commission
This query is : Resolved
30 November 2016
which are all documents required for paying sales commission amount to an individual ?
IS agreement itself sufficient ? are else invoice required ?
Please resolve my situation
01 December 2016
Agreement and invoice both are required
VK
01 December 2016
thnx for your valuable answer and one more clarification normal individual also should issue invoice ? and how come it is ?
01 December 2016
Yes he can give the same in invoice format
01 December 2016
he don't have any registrations and all
23 July 2025
Here’s a clear summary about **sales commission payment to an individual**, especially if that individual is **not registered under GST**:
---
### 1. Documents Required for Paying Sales Commission:
* **Agreement:**
A formal agreement or contract between your company and the individual clearly specifying the commission terms, rates, and payment conditions is essential. This forms the basis of the relationship.
* **Invoice:**
The individual should ideally issue an invoice to your company for the commission amount. The invoice should include:
* Name and address of the individual
* Description of services (commission)
* Amount charged
* Date and invoice number
---
### 2. What if the Individual is Not Registered under GST?
* Even if the individual is not GST-registered (for example, because their turnover is below the threshold), **they can still issue an invoice** — it just won't have GST charged on it.
* The invoice acts as proof of services rendered and is important for your accounting and tax deductions (TDS, etc.).
---
### 3. Is Agreement Alone Sufficient?
* **No**, agreement alone is generally **not sufficient**. The invoice serves as a document to record the transaction for accounting and tax purposes.
---
### 4. Additional Notes:
* Since the individual is not GST registered, **no GST will be charged or paid** on the commission.
* Your company may need to deduct **TDS (Tax Deducted at Source)** on commission payments as per Income Tax rules.
* Keep proper records (agreement + invoice + payment proof) for compliance and audit.
---
### Summary:
| Document | Requirement | Purpose |
| ---------------- | ----------------------------------------- | ------------------------------------- |
| Agreement | Mandatory | Defines terms and scope |
| Invoice | Required | Proof of payment request & accounting |
| GST Registration | Not mandatory if turnover below threshold | No GST charged if unregistered |
---
If you want, I can help you draft a sample commission invoice format for an unregistered individual or a sample agreement. Would you like that?
---
### 1. Documents Required for Paying Sales Commission:
* **Agreement:**
A formal agreement or contract between your company and the individual clearly specifying the commission terms, rates, and payment conditions is essential. This forms the basis of the relationship.
* **Invoice:**
The individual should ideally issue an invoice to your company for the commission amount. The invoice should include:
* Name and address of the individual
* Description of services (commission)
* Amount charged
* Date and invoice number
---
### 2. What if the Individual is Not Registered under GST?
* Even if the individual is not GST-registered (for example, because their turnover is below the threshold), **they can still issue an invoice** — it just won't have GST charged on it.
* The invoice acts as proof of services rendered and is important for your accounting and tax deductions (TDS, etc.).
---
### 3. Is Agreement Alone Sufficient?
* **No**, agreement alone is generally **not sufficient**. The invoice serves as a document to record the transaction for accounting and tax purposes.
---
### 4. Additional Notes:
* Since the individual is not GST registered, **no GST will be charged or paid** on the commission.
* Your company may need to deduct **TDS (Tax Deducted at Source)** on commission payments as per Income Tax rules.
* Keep proper records (agreement + invoice + payment proof) for compliance and audit.
---
### Summary:
| Document | Requirement | Purpose |
| ---------------- | ----------------------------------------- | ------------------------------------- |
| Agreement | Mandatory | Defines terms and scope |
| Invoice | Required | Proof of payment request & accounting |
| GST Registration | Not mandatory if turnover below threshold | No GST charged if unregistered |
---
If you want, I can help you draft a sample commission invoice format for an unregistered individual or a sample agreement. Would you like that?
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