Manager - Finance & Accounts
58550 Points
Joined June 2010
Hello Sanket,
Regarding your question about GST applicability on commission received from a foreign company, here’s the clarity:
1. Is GST applicable on commission income from foreign company?
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Export of services is treated as zero-rated supply under GST (Section 16 of IGST Act).
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If your company provides services (like commission) to a foreign company outside India, and
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The place of supply is outside India, and
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The recipient is located outside India, and
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The payment is received in convertible foreign exchange or in Indian rupees wherever permitted by RBI,
then it qualifies as export of services.
2. GST Treatment:
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Export of services is zero-rated supply under Section 16 of IGST Act, 2017.
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You do not have to pay GST on the commission income from foreign company.
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You can claim refund of input tax credit on inputs/services used to provide that service.
3. Relevant Sections & Provisions:
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Section 2(6) of IGST Act: Defines export of services.
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Section 16 of IGST Act: Zero-rated supply.
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Section 54 of CGST Act: Refund of input tax credit on zero-rated supplies.
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Place of supply rules under Section 13(2) of IGST Act must confirm that supply location is outside India.
4. Conditions for Export of Services:
| Condition |
Requirement |
| Supplier of service |
Registered person in India |
| Recipient of service |
Located outside India |
| Place of supply |
Outside India |
| Payment received |
In convertible foreign exchange or permitted INR |
| Service provided |
Exported outside India |
5. Summary:
| Scenario |
GST Applicability |
| Commission income from foreign company (export of service) |
GST @ 0% (Zero-rated) |
| Eligible to claim ITC refund |
Yes |