GST on intermediary service

[Kavali Ramanjeneyulu]

One taxpayer located in Hyderabad is providing marketing services as an Intermediary to a Company located in Singapore. As per the Section 13(8) of the IGST act, the place of supply of Intermediary is the location of the Supplier . So , in this case, the place of supply is Hyderabad which is the location of the supplier. In this regard, clarification may please be given as to whether IGST or CGST +SGST is payable on the said intermediary services.

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Showing Replies 1 to 2 of 2 Records

1 Dated: 7-1-2021
By:- KASTURI SETHI

As per FAQ (serial no.25) issued by CBIC, CGST/SGST is applicable. But in my view, as per Section 7(5) read with Section 8(2) of IGST Act, IGST is applicable inasmuch as FAQ has no statutory force. De facto, services have been received in a foreign country and consumed and enjoyed outside India. So better and safer option is IGST.

2 Dated: 7-1-2021
By:- Kavali Ramanjeneyulu

But as per Section 13(8) of the IGST act, place of supply for Intermediary service is the location of the supplier. And as per section 8 (2) of the IGST act , Subject to the provisions of section 12, supply of services where the location of the supplier and the place of supply of services are in the same State or same Union territory shall be treated as intra-State supply. Accordingly, my view is CGST and SGST is payable as in this case also location of the supplier and place of the supply fall in the same state. Please clarify/comment sir.

[Alkesh Jani]

Shri

The reply give by our expert Shri Kasturiji Sir, at Issue ID = 116950, is acceptable and I also agree with the views expressed by him.

[Ganeshan Kalyani]

I fully agree with the views of Sri Kasturi Sir.

[CA HemanthKumar]

Yes, safer option would be IGST. Even if department in future says it is CGST+SGST, there won`t be any interest implications as per section 77 of the CGST Act, 2017

Regards

CA Hemanth Kumar

[CA HemanthKumar]

Gujarath AAR in case of M/S. SAGAR POWERTEX PRIVATE LIMITED 2021 (1) TMI 334, ruled that CGST + SGST would apply for intermediary services even in case the recipient is located outside India.

[Kavali Ramanjeneyulu]

Thank you all for providing clarification and case laws.

AI Summary

Place of supply for intermediary services: supplier location may render the supply intra state, attracting local GST rather than IGST. Whether GST on intermediary services to a foreign recipient is IGST or CGST+SGST depends on the place of supply rules: Section 13(8) designates the supplier's location for intermediary services, which can render the supply intra State and subject to CGST and SGST, while alternative statutory readings and administrative FAQs posit IGST treatment for cross border consumption.