IGST ON COMMISSION INCOME

[NILESH PITALE]

Dear Expert

We are Importer and Trading Goods in the Local market, We have to pay Less Amount to the Our Foreign Supplier, We have Accounted Less Amount Under the head Commission Income under balance Sheet, Now Under Department Audit, GST Officer has issued show cause for Leavy IGST Amount on Commission Amount Under Section 13 of IGST Act, (Section 13(8)(B), They are Treating us Intermediary for such Commission . How to tackle , Please Guide

[Amit Agrawal]

Are you buyer of goods imported or not? Or, are you importing goods in the capacity of agent of foreign supplier?

If you are buyer of goods imported (i.e. you are not importing goods in the capacity of agent of foreign supplier) and if you can prove the same with documentary evidences, then, kindly explain why you booked difference as 'commission income' instead booking the transactions as sales & purchases (as traders normally do)?

[KASTURI SETHI]

Dear Querist,

Terms and conditions of the agreement/contract executed with foreign buyer supported books of accounts would determine whether you are intermediary or not.

[Shilpi Jain]

If you are trading in goods, that would mean you have accounted purchase and sale in your books. Profit will be the difference between the two.

If commission is accounted in books then the activity may not be trading.

[KASTURI SETHI]

The definition of 'intermediary' under Section 2 (13) of IGST Act will be helpful in this context  “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;

[Vijay kumar]

If you are only trader and the intermediary agent is located abroad, to the extent of commission, the place of supply is abroad and is not taxable. It doesn't matter if you have reduced the commission. If you can share the notice, we can throw more light on the issue

AI Summary

Trader Challenges IGST on Commission Income; Seeks Clarity on Intermediary Status Under Section 13(8)(B) of IGST Act An importer and trader of goods in the local market has been issued a show cause notice by a GST officer for levying IGST on commission income, treating them as an intermediary under Section 13(8)(B) of the IGST Act. The trader seeks guidance on addressing this issue. Respondents suggest verifying the nature of transactions and agreements to determine if they qualify as an intermediary. They advise proving the role as a buyer rather than an agent and clarifying accounting practices. If acting purely as a trader, the commission may not be taxable if the intermediary is abroad.