GST on commission paid to foreign agent

[JIGAR SHAH]

We are paying commission to a foreign agent against export orders. RCM will be applicable or not?

[Dhruv Dedhia]

Agency services would be treated as intermediary service.

As per section 13(8)(b) of IGST Act 2017, the place of supply of intermediary service would be the location of supplier of service.

In your case, the location of the agent who is a supplier of service would be outside India. Hence GST would not be applicable where the place of supply is outside India.

Hence also RCM would not be liable for the same transaction.

[KASTURI SETHI]

No question of RCM. No question of GST. Place of supply is in a non-taxable territory (foreign country). I support the views of Sh.Dhruv.

[JIGAR SHAH]

Dear all,

Thank you for the response towards the query.

[Rakesh Chitkara]

I am facing litigation on one such issue where my appeal is in CESTAT. Hotel is in India. Business was done through Expedia.com & Booking.com, foreign based portals. As per us, no service tax is payable though Department contends that tax should have been paid under RCM and input credit taken simultaneously.

To end the controversy, as it is a Revenue Neutral situation where such tax paid in cash is available as credit, and Hotel's ITC availement is low, we have chosen to pay GST, purely for commercial reasons.

Who has faced this issue ? Would like to share notes with him.

[JIGAR SHAH]

Dear Mr.Chitkara

Thank You very much for the reply.

AI Summary

Place of supply for intermediary services abroad means no GST or reverse-charge on commission paid to foreign agent. Classification as an intermediary service makes the supplier's location the place of supply; if the foreign agent is located outside India the place of supply is outside the taxable territory, GST does not apply, and reverse charge does not arise on commission to the foreign agent.