commission

[Dinesh Biyanee]

if a person receives commission less than 20 lacs during a year will need GST registration or not.

will he be considered as pure agent ?

[KASTURI SETHI]

(i) No registration required.

(ii) Whether a commission agent is pure agent or not, it depends upon terms and conditions of contract/agreement . However example C & F Agent, CHA etc. are pure agent.

Rule 33 of CGST Rules, 2017 also prescribes the procedure for transaction in which a person acts as a pure agent for a principal for certain services supplied to the principal through third party.

Although, supply by principal and agent or vice versa inter se is treated as a supply in Schedule-I of CGST Act, it’s not necessary that every supply through an agent is a taxable supply. Any value of supply of services provided in the capacity of pure agent will not be included in the taxable value of supply for the purpose of charging GST.

Section 2(5) of GST Act defines an ‘agent’ means a person including a factor, broker, commission agent, arhatia, delcredere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another.

The above definition given in GST Act, doesn’t define the term pure agent, however, as per the explanation given in Rule 33 of CGST Rules, 2017, “pure agent” means a person who -

(a) enters into a contractual agreement (whether written on otherwise) with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both;

(b) neither intends to hold nor holds any title to the goods or services or both so procured or provided as pure agent of the recipient of supply;

(c) does not use for his own interest such goods or services so procured; and

(d) receives only the actual amount incurred to procure such goods or services.

[Alkesh Jani]

Sir, for my knowledge purpose, please clarify above raise issue by pursuing Section 15(2)(b) & (c) of the CGST Act, 2017.

Regards,

[KASTURI SETHI]

Section 15 (2) (b) &(c) both talk of expenses (to be incurred ) in relation to supply of goods or services are to be included in the transaction value for the purpose of payment of CGST/SGST. Commission Agent and Pure Agent are different concepts regarding transaction value for the purpose of payment of CGST/SGST.

[Ganeshan Kalyani]

if turnover is within the threshold limit of rs. 20 lacs registration under gst is not required .

AI Summary

No GST Needed for Earnings Under 20 Lakhs; Pure Agent Status Hinges on Rule 33 of CGST Rules, 2017 A query was raised about whether a person earning a commission less than 20 lakhs annually requires GST registration and if they qualify as a pure agent. Responses clarified that no GST registration is needed if turnover is below 20 lakhs. The distinction between a commission agent and a pure agent depends on contractual terms, with Rule 33 of the CGST Rules, 2017 providing guidelines for pure agents. Pure agents incur expenses on behalf of a principal without holding title to goods or services. Section 15(2)(b) & (c) of the CGST Act addresses expenses included in transaction value for GST purposes.