Manager - Finance & Accounts
58404 Points
Joined June 2010
Hey Shivalingappa! About commission paid to pigmy agents and its tax treatment under GST:
Is commission paid to pigmy agents taxable under Reverse Charge Mechanism (RCM)?
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Pigmy agents are typically agents who collect small savings from customers on behalf of a chit fund or cooperative society.
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Commission paid to pigmy agents is treated as consideration for services rendered.
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Whether GST is payable under RCM depends on the supplier and recipient status:
When RCM applies:
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If the pigmy agents are unregistered persons, and your business (recipient) is registered under GST, then commission paid to unregistered agents is liable to GST under Reverse Charge.
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This is because services received from an unregistered supplier by a registered recipient are covered under RCM.
When RCM does NOT apply:
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If pigmy agents are registered under GST, then they will charge GST on commission invoices themselves, and you pay GST normally.
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If the agents are unregistered but the service is exempt or outside GST scope, then no RCM applies.
Summary:
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If your pigmy agents are unregistered, you must pay GST on commission under RCM.
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If agents are registered, you pay GST on their invoice (normal forward charge).