Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

GST on Sub broker when the Broker is registered

venkatesh (xxxx) (52 Points)

20 June 2017

SIR I WANT TO KNOW THAT WHETHER SUB BROKERS ARE REQUIRED TO OBTAIN GST REGISTRATION AND WHETHER ANY EXEMPTION IS AVAILABLE TO THEM AS UNDER SERVICE TAX.

Very confused about this as couldn't find anything relevant about sub broker

Reply
Follow
Share

7 Replies

sanjay vijayvargiya (2 Points)
Replied 22 June 2017

SIR I WANT TO KNOW THAT WHETHER SUB BROKERS ARE REQUIRED TO OBTAIN GST REGISTRATION AND WHETHER ANY EXEMPTION IS AVAILABLE TO THEM AS UNDER SERVICE TAX.

Nirmal Jhanwar (Chartered Accountant) (35 Points)
Replied 14 July 2017

Please note the GST rules and awareness is/are, changing/updated practically every day. In-case you feel that certain facts are wrong or not correct. ** Please consult with your Chartered Accountants, Lawyers, Main brokers ** GST registration is not mandatory for every Sub Brokers & Authorised Persons. Sub Brokers & Authorised Persons need to register for GST only if their annual turnover is above 20 lakhs (or 10 lakhs as in some states) Annual Turnover of Rs 20 Lakhs means , the commission that you receive from your broker. YOUR NETT FINAL PAYOUT. (Eg. If in a particular month you make a total brokerage of Rs 1,00,000/- and your sharing with your main broker is 50 : 50, then you will get commission of Rs 50,000/- This 50,000/- is your turnover. If someone does other business eg. MF, Insurance, Other financial products, or any other products under the same name and the total commission for all the products is more than Rs 20,00,000/- then YOU WILL HAVE TO REGISTER FOR GST. If you register for GST, you will have to make a invoice in the name of your broker at the end of every month and charge GST. . (Eg. If in a particular month you make a total brokerage of Rs 1,00,000/- and your sharing with your main broker is 50 : 50, then you will get commission of Rs 50,000/- You will raise your broker the following bill. (as per govt. format) Bill / Invoice To Main Broker: Total Payout earned or commision 50,000.00 Add CGST @ 9 % 4,500.00 Add SGST @ 9 % 4,500.00 BROKER WILL PAY YOU ----> 59,000.00 This 9000/- you will have to deposit to the government account if you have any input credit you can adjust the same Please note that there will be no change in dealing with your customers. There is no charging the customers.

Geetha Gupta (Accountant) (325 Points)
Replied 29 July 2017

Dear Nirmal ji,

Thanks for this clarification.

Going ahead with your example, we will assume that the sub broker/Authorised person is registered. Then the account heads for the two charges will be output CGST and Output SGST?

ie.. the journal entry for this will be

==========================================

Main broker a/c Dr. 59,000

Brok Passout Cr. 50,000

Output CGST 9% Cr. 4,500

Output SGST 9% Cr. 4,500

============================================

Please clarify

Regards,

Geetha

Geetha Gupta (Accountant) (325 Points)
Replied 30 July 2017

Hi All,

as per U/s 24 (vii) CGST act

(vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise;

means

all sub brokers and Authorised Persons have to mandatorily take GST registeration, irrespective of the turnover limits specified in sec 22 of CGST Act

Regards,

Geetha

Ishan Kakkar (Others) (58 Points)
Replied 29 August 2018

Originally posted by : Geetha Gupta
	Hi All, as per U/s 24 (vii) CGST act (vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise; means all sub brokers and Authorised Persons have to mandatorily take GST registeration, irrespective of the turnover limits specified in sec 22 of CGST Act Regards, Geetha

Hello!
But, aren't securites not considered goods as per GST? Then how is it mandatory for a sub-broker to apply for GST Registration?

Geetha Gupta (Accountant) (325 Points)
Replied 09 September 2018

Hi Ishan,

And, securities are not considered services either as per GST Act !!!!!

As far as Authorised Persons / sub-broker are concerned, they are facilitators for the main brokers - helping the brokers to reach out to clients more easily. Thus they are service providers to the main brokers. They earn commission for providing their services to the mainbroker. Hence the work of the Authorised persons can be considered services.

Regards

Geetha

Ishan Kakkar (Others) (58 Points)
Replied 09 September 2018

Originally posted by : Geetha Gupta
	Hi Ishan, And, securities are not considered services either as per GST Act !!!!! As far as Authorised Persons / sub-broker are concerned, they are facilitators for the main brokers - helping the brokers to reach out to clients more easily. Thus they are service providers to the main brokers. They earn commission for providing their services to the mainbroker. Hence the work of the Authorised persons can be considered services. Regards Geetha