GST over direct selling distributors

[nalin shah]

Sir,

Kindly clarify registration liability under GST for direct selling distributors.

The exemption limit of 20/10 lakhs applicable not?

HSN code for the service provided.

For your information, s/he do not sell any goods of the company but get facilitation fees on sells made by persons introduced by him to multilayer marketing companies like Modicare, Amway, Tupperware etc.

Thanks in advance.

[KASTURI SETHI]

Dear Querist,

Query-wise reply is as under:-

1. Yes. Threshold exemption available.

2. 998599 (Other business support services nowhere else classified).

Facilitation fee is another name for commission. In pre-GST era, it was covered under B.A.S. In support Case laws pertaining to pre-GST era are appended below:-

2013 (31) S.T.R. 701 (Tri. - Del.) = 2014 (1) TMI 307 - CESTAT NEW DELHIRAJASTHAN TOURISM DEV. CORPORATION LTD. Versus COMMR. OF C. EX., JAIPUR

2017 (47) S.T.R. 172 (Tri. - Chan.)= 2016 (9) TMI 588 - CESTAT CHANDIGARHSUKHMANI SOCIETY FOR CITIZEN SERVICES Versus C.C.E. & S.T., CHANDIGARH

2017 (52) S.T.R. 299 (Tri. - Mumbai)= 2016 (12) TMI 541 - CESTAT MUMBAITOYOTA LAKOZY AUTO PVT. LTD. Versus C.S.T., C. EX., MUMBAI-II & V

[nalin shah]

Thanks a lot Kasturi sir. It really clarifies the query.

[DR.MARIAPPAN GOVINDARAJAN]

It is really a commission and subject to the provisions of GST.

[nalin shah]

Thanks DR.MARIAPPAN GOVINDARAJAN Sir,

The intermediates getting commission (who do not participate directly in transaction) get commission for the services because of downside trades, The main query is whether sec. 24 (vii)CGST act applicable over them or not?

As per the referred HNS code it does not apply.

Please enlighten.

Thanks

AI Summary

GST Registration Not Required for MLM Facilitation Fees; Exemption Limit Applies, Section 24(vii) CGST Act Not Applicable A query was raised regarding the Goods and Services Tax (GST) registration liability for direct selling distributors who earn facilitation fees, not from selling goods, but from commissions on sales made by others in multi-level marketing companies. The exemption limit of 20/10 lakhs is applicable, and the service is classified under HSN code 998599 for other business support services. Responses clarified that facilitation fees are akin to commissions and are subject to GST provisions. Further clarification was sought on whether section 24(vii) of the CGST Act applies, with the conclusion that it does not, based on the HSN code.