GST Applicable or not if we received hotel booking commission invoice from foreign travel agent

[Guest]

Dear Sir,

I am a hotelier & we provide accommodation service to the guest who is coming through foreign travel agent & travel agent paid us after deducting his commission , after that they issue commission invoice to us.

Now my query is that the GST is applicable on commission invoice which we have received from foreign travel agent or not . If applicable then CGST & SGST applicable or IGST is applicable

Thanks

R K Sharma

[ABHISHEK TRIPATHI]

Dear RK Sharma Ji,

You are receiving services from foreign travel agents (FTA) for getting customers to your hotel. The FTA is charging commission on the payment received from the customers. In such a situation FTA is acting as an agent and such services will be well within the meaning of intermediary u/s. 2(13) of the IGST Act. Thus, refer to S. 13(8)(b) of the IGST Act. Place of Supply is in foreign land i.e., non-taxable territory and hence IGST is not required to be discharged under reverse charge basis.

Further read why not leviable to IGST

Charging section 7(4) r/w. section 5(1) of the IGST Act. So, if you read them with S. 2 (11), it may be construed that everything boils down to place of supply of service, in your case your place of supply of service is not in India, thus you don’t satisfy the third ingredient of section 2(11), hence not leviable to Section 7(4)r/w. 5(1).

Relevant statutory provisions of IGST Act.

S. 2(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;

S. 13 (8) The place of supply of the following services shall be the location of the supplier of services, namely:––

......

(b) intermediary services;

….....

5. (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 of the Central Goods and Services Tax Act and at such rates, not exceeding forty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person:

Section 7 (4) Supply of services imported into the territory of India shall be treated to be a supply of services in the course of inter-State trade or commerce.

Sec 2 (11) ‘‘import of services” means the supply of any service, where––

(i) the supplier of service is located outside India;

(ii) the recipient of service is located in India; and

(iii) the place of supply of service is in India;

[KASTURI SETHI]

SH. ABHISHEK TRIPATHI Ji,

Sir, Your reply is par excellent. Really I am learning a lot from you. I cannot stop myself from summing up about your standard of drafting and knowledge as "You are an asset for TMI". Your experience, higher qualification, knowledge and passion for writing speaks volume of these"

[CA HemanthKumar]

Agreed with the views of Sri ABHISHEK TRIPATHI, as the PoS and location of supplier is outside India, Levy as per section 9 under GST will not attract.

[ABHISHEK TRIPATHI]

Dear KS Sir,

I am humbled by your humility and kind words. Thank you so much.

AI Summary

GST Not Applicable on Commission from Foreign Travel Agents; Place of Supply Outside India Exempts Service from Taxation A hotelier inquired about the applicability of GST on commission invoices received from foreign travel agents. The consensus among respondents was that GST is not applicable. The foreign travel agent acts as an intermediary, and according to the IGST Act, the place of supply for intermediary services is outside India, making the service non-taxable in India. Therefore, IGST does not need to be discharged under the reverse charge mechanism. The discussion highlighted the importance of the place of supply in determining GST liability.