Commission and Shipping charges on exempted goods

[Satya Sharma]

I need to know if ITC can be claimed on commission and shipping charged on supply of exempted goods. To be specific, Amazon is online selling our exempted goods and charging their commission and shipping fee being delivered to all over India, can we claim GST charged on commission and shipping fee provided we have monthly invoice from Amazon for Commission and Shipping Fee.

[KASTURI SETHI]

You have Tax Invoice from Amazon. You can claim ITC on account of GST paid on the amount of commission paid for the supply of exempted goods but with the condition that the same is to be utilized for taxable supply of service or goods. Are you registered for taxable supply of goods or services also ?

[Rajagopalan Ranganathan]

Sir,

In my view if all your supplies are exempted from GST you cannot ab initio avail ITC of tax paid on inputs/input service. Moreover gst paid on commission and shipping fee is in respect of exclusively exempted goods you cannot avail ITC.

[Ganeshan Kalyani]

Input Tax Credit (ITC) is allowed only when the final outward supply is taxable under GST. In your query, as you say, the final product is exempted, the ITC is not eligible.

[KASTURI SETHI]

There are two activities involved :-

1. Supply of exempted goods

2. Receipt of taxable supply of service through Amazon and GST paid on the amount of commission.

There are two basic conditions for availment of ITC and these are:-

(i) Tax must be paid on taxable supply of goods or service.

(ii) Tax must be utilized in the course or furtherance of business (Taxable).

If you fulfill both conditions you can avail ITC otherwise not.

AI Summary

Input Tax Credit on commission and shipping allowed only if GST relates to taxable supplies and used for taxable activities.
ITC on GST paid for marketplace commission and shipping is claimable only if the GST relates to a taxable supply and the credit is utilised for taxable business activities; if the supplier's outward supplies are exclusively exempt, ITC for those input services is not available.