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Gst on income from foreign commission

gurgaon12 (Sales Manager) (30 Points)

17 September 2017

Hello,

We represent a couple of foreign cos in India and do commission based sales for them here. All orders are placed directly between buyers & sellers, facilitated by us.

I hear from differenet sources that 18% GST will be leived on income from foriegn commission. This means our tax liability simply increases by 18% (income tax slab is already 30%). Is the understanding correct ?

Need advice on the above.

Regards.

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11 Replies

(Guest)

income tax is direct tax which u have to bare and gst is indirect tax which

ur debtor or creditor whichever the case has to bare

(Guest)

income tax is direct tax which u have to bare and gst is indirect tax which

ur debtor or creditor whichever the case has to bare

gurgaon12 (Sales Manager) (30 Points)
Replied 19 September 2017

Thanks Samir for your reply. I understand direct & indorect taxes.

But for the Co, tax liabalities increases by almost 50%. Instead of 35% earlier, it's now > 50%. Correct ?

Is there a way we can get this re-imbursed/ refunded/ adjusted?

Regards.

Praneet Kumar (Service (Finance & Account) (24 Points)
Replied 06 October 2017

You are facilitating Sales for overseas suppliers for commission .it means you are acting as an intermediary .

As per sec 2(13) of IGST ACT 2017 “intermediary” means a broker, an agent or any other person, by whatever
name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account;

Now as per sec 13 (8) of the IGST Act 2017, Place of supply for the intermediary services shall be the location of the supplier i.e in your case in India.

Location of supplier of service : India

Place of supply of service : India

So even if the recepient of the services are outside India still it will not be treated as export of services as all the conditions for export of services are not fulfilled ( Place of supply - India; Refer Sec 2(6) clause iii of IGST Act 2017 ) and hence taxed in india .

GST Rate applicable will be 18%

Regards,

gurgaon12 (Sales Manager) (30 Points)
Replied 06 October 2017

Thanks Mr. Kumar for your reply. Just wish to inform you that the Supplier is located outside India and Buyer is in India. Will be taxed @ 18% GST in this case ?

Yugesh (Individual) (29 Points)
Replied 14 December 2017

What is the applicability of GST if the goods supplier is outside India and the commission is paid only by this foreign supplier. 1. What if the commission is below the threshold limit ?

Arun (B.Com) (28 Points)
Replied 08 January 2018

Can input availed for the same ????as we are paying Under RCM.

gurgaon12 (Sales Manager) (30 Points)
Replied 08 January 2018

Would be good if this can be clarified. We have already paid GST @ 18% and now seeking clarification if it can be REFUNDED.

Dipen (article) (434 Points)
Replied 08 June 2018

Hi,

Would this fall under section 24 - Compulsory registration? i.e even if place of supply is India and commission income attracts gst but commission is below threshold limit.

Regards,

NAREN KINI (2 Points)
Replied 29 July 2018

Very confusing...whereas one CA says IGST is borne by the buyer others say it is not an export.

The case: "M" is the middleman and he facilitates a sale for a foreign buyer "F" by introducing him to an Indian buyer "I"

No goods are passed through "M". "F" exports the goods direct to "I" and the latter pays the seller directly and bears the custom duty. "M" only receives a commission from "F".and nothing fro "I". "M" raises commission invoice to "F" in dollars and gets paid in dollars. He naturally cannot charge IGST/CGST/SGST to his foreign seller. Nor to the Indian buyer because there is no commercial dealing between them.

Now one expert says that the deal is between "F" and "I", so not GST is applicable to "M"

Another expert says GST is applicable because since the seller and commissioned agent of the foreign buyer are both in India, it comes under GST and it does not fall under the GST definition of export.

!. Why the confusion. Who is correct.

2. Was GST a system where you charge it to a party and then deposit that amount to the government? Who does "M" charge GST to?

3. Or is the second opinion trying to say that since the foreign buyer cannot be charged GST, "M" has to pay GST under the Reverse Mechanism