Gst compliance for network marketers / multi level marketers

CACLUBINDIA  why nobody answered it till now ??

please consider it in your concern.

Hii Chaitanya Got same doubt..while searching in Google found your query in ca club India.. Have you found solution

Hi Sai

No clarification from any Department.

As per my knowledge,
No Mlm distributor has taken GST registration even though their income exceed thresshold.

need to wait. Think it takes time for that industry to have special sections in tax laws

Although I am not pretty sure of my analysis since I have not done extensive practice in this area but based on textbook reading my take is following:- 1) it is a service since everything not Good is the service and Goods are movable property,actionable claims,standing crops in GST except money and securities 2) Business in GST is anything done for consideration by any person with the intent to do business. 3) it's a supply under 7(1)(a) since service is given for consideration and anything done for consideration is supply. So it is supply of service with consideration. Herbalife appoints Mr X as commission agent i.e he has to finds customer Mr Y for him who will purchase from Herbalife and a commission is given to Mr X But here companies are making customer as their commission agents continuously with the motive to increase customer base so the %age of commission paid to Mr X on the sale made by Mr Y n further are payments for supply of service to company by MrX for getting of customer who is continuously making profits for company by making repeated sales. So simply agent principal relation b/w Mr X n Company. It cannot be principal to principal basis since invoice to Mr Y or further is given by co itself. If receipts exceed 20L so reg is required. Inter state supply for 20L is also exempt by 23(2). After 20L reg required. Place of supply for determination of whether supply is intra or inter as per sec 12 of IGST assuming both Co and Mr X is in India and Co is GST reg will the Reg place of business of Co. So if Mr X is Delhi and Co is reg in Kerala so it will be simply inter state supply whether customer Mr Y is of Delhi,Mumbai, Karnataka or elsewhere law will assume service recipient is state of Kerala. If Mr X is in USA doing similar thing than as per Sec 13 of IGST place of supply is location of supplier i.e USA since POS is not in India no GST implications will be there for Company to follow only TDS u/s 195 is required.

Thanks for your reply .

I am handling a case on the same, 

Main Company is selling products to its customer B and raising invoice of 10k.

Profit say 1000

Rest 9000, say 5000 commission to A and rest 4000 to all others upward of the Pyramid of agents.

 

A - Person who actually facilitated sales to B

 

Intermediary defination under GST will cover A only and not others. Therefore ITC can be claimed for A, but what about other ITC as on that 4000 ??? Yes, it's an important question

 

Company receives Tax invoice from all the agents of the pyramid, so Agents pays GST on 9000...So No Treasury Loss to Government.

 

But look at other side of coin, GST is a self assessment Tax and since Agents have given their returns , so claim of refund don't arise and moreover since they are receiving commission or what ever , it's a supply and so liable to GST.

 

BUT, should the company take ITC on that 4000? Big question.

 

If summons are given to those 4000 agents and asked that u got commission for sale facilitation, do u know the Buyer called as B?

No Sir... hahahahaha

That means you are not an intermediary, waww

 

Hope members enlighten more if I'm wrong.