PIGMY COMM

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)?

• Pigmy agents are typically agents who collect small savings from customers on behalf of a chit fund or cooperative society.

• Commission paid to pigmy agents is treated as consideration for services rendered.

• Whether GST is payable under RCM depends on the supplier and recipient status:

When RCM applies:

• 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.

• This is because services received from an unregistered supplier by a registered recipient are covered under RCM.

When RCM does NOT apply:

• If pigmy agents are registered under GST, then they will charge GST on commission invoices themselves, and you pay GST normally.

• If the agents are unregistered but the service is exempt or outside GST scope, then no RCM applies.

Summary:

• If your pigmy agents are unregistered, you must pay GST on commission under RCM.

• If agents are registered, you pay GST on their invoice (normal forward charge).