Earning though doing online CreditCard Transaction for others

[rahul gupta]

Hi,

With my credit cards I do online transactions for one person and in return I charge 2% as my commision on that transaction amount.
That person pays the transaction amount and the commision amount directly to my credit card (online transfer).

He use my credit cards to grab the offers generally run by various e-commerce websites. On average the credit card usage will be 3-4 lakh per month. Approx 50 lakh in a year.

My question is:

1. Is earning through the commision in this way comes under GST ? If yes then how much percent it will be ?

2. If it doesn't fall under GST, then do I need to have any legal contract between us, specifing in details that I just charge the commision on that transaction amount, as I don't know for what purpose he is doing such a bulk purchasing.

Also to specify, he does not hold any GST number ( he is unregistered user).

Please guide me. I don't have any issue in paying tax on earnings and want to do all the thing legally so that I can't get scrutiny by IncomeTax.

-Thanks
Rahul

AI Summary

GST on commission for facilitating credit card purchases requires registration and taxation as supply of services when turnover exceeds threshold.
Commission earned for processing online credit card transactions is a taxable supply of services; where aggregate turnover exceeds the registration threshold the intermediary must obtain GST registration and charge GST on the commission, invoice either by adding GST or showing net commission plus GST, and declare the income for income tax purposes. The arrangement should be documented by a legal contract and appropriate professional advice sought to manage compliance and investigatory risks.