How is taxation done between three parties when the middle party is working on a commission basis without letting the other two transact with each other

[Jijo Mathew]

There is an Internet portal where we have companies and individuals registered.

The portal provides companies the service of Individuals

Payment model is like, Companies pays portal, Portal pays individuals , Portal take commission from the companies for the services provided by the individuals

What all taxes are involved in these transactions ? Who all can generate an Invoice ?

1. Payment from companies to Internet portal for facilitating service

2. Internet portal to Individuals for providing service for the companies

[KASTURI SETHI]

A person who gets commission works for and on behalf of another is called intermediary. See the definition of 'intermediary' under Section 2(13) of IGST Act. The supplier of services providing service on his own account will not be treated as intermediary.

(13) “intermediary” means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account".

Above definition should be read with Board's circular appended below: (emphasis is on para 3.1)

Information Technology enabled Services (ITeS services) - Clarification on various doubts

C.B.I. & C. Circular No. 107/26/2019-GST, dated 18-7-2019

[Shilpi Jain]

The Company can invoice the individual and the internet portal can invoice the Company for its commission.

Payment to the portal by individual should not affect taxability

AI Summary

Intermediary classification under GST: portals treated as facilitators charging commission and invoicing companies for that service. Where a portal takes commission to arrange services between companies and individuals, the portal is an intermediary-a facilitator who does not supply the underlying service on its own account-and may invoice companies for its commission. The individual provides the primary service to the company and the company/individual supply relationship generates the principal taxable supply and corresponding invoice; routing payments via the portal does not alter these tax characters.