commission paid is RCM applicable under GST

[mandar yadav]

We are Pvt. ltd company & we have Regd. GST no. we have paid commission to Unregistratate person regarding we get business from him & we directly sold our goods to third party now our question is that should we pay GST under RCM for commission paid to Unregistratate person for his giving business to us. if yes or no then please provide notification ,section,rule which is helpful to us when assesment

[Padmanathan KV]

Sir,

No, RCM is not required to be paid on commission paid to unregistered person. There are two provisions which provide for RCM under GST namely, Sec. 9(3) & Sec. 9(4).

Sec 9(3) provides for RCM on notified goods or services. As such, Notification No. 4/2017 CT-R and No. 13/2017 CT-R respectively provides for the goods and services on which RCM is applicable. The service provided by agent to principle for getting customers is not included in the said Notification. (although Insurance agent, recovery agent, Business Facilitator & Business Correspondent etc are included).

Section 9(4) provided for RCM on supply received from unregistered person. However RCM was absolutely exempted with effect from 13-10-2017 vide Notification 8/2017 amended by 13/2017. Later Section 9(4) itself has been amended with effect from 1-2-2019 by CGST ( Amendment) Act, 2018. Currently, Sec 9(4) applies only to Real estate promoters.

[KASTURI SETHI]

Intermediary services are not covered under RCM. I concur with the views of Sh.Padmanathan Kollengode. Nicely explained.

AI Summary

Reverse charge mechanism not triggered for commission to unregistered agents; RCM limited to notified supplies and real estate promoter cases. Payment of commission to an unregistered agent does not attract Reverse Charge Mechanism under GST because RCM applies only to specified notified goods and services and, as amended and exempted by notification, to supplies from unregistered persons now limited to real estate promoter transactions; intermediary or agent services for procuring customers are not included in the notified categories.