GST applicability on marketing fees paid consultants abroad

[Raam Srinivasan Swaminathan Kalpathi]

The client is an internaltional freight forwarder (plus provides related logistics services).  Marketing fees is paid (fixed component +  one time bonus depending on the leads generated by the consultant) to a Consultant outside India.  Request the experts to elucidate on the applicability of GST (pre and post Sept 22, 2025).  Will the supply be considered as 'intermediary services'.  Thanks

[KASTURI SETHI]

Answer is NO.

Freight Forwarder and Freight Forwarding Agent (Intermediary) are different terms

The meaning of the terms, ‘Freight Forwarder’ and ‘Forwarding Agent’ in different dictionaries and in the dictionary of Halsbury’s law of England have been discussed by Hon’ble Tribunal in the case of Mahavir Generics Vs. CCE, Bangalore - 2004 (4) TMI 2 - CESTAT, NEW DELHI

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shri Sethi.

[KASTURI SETHI]

Dr. Mariappan Govindarajan Ji,

Sir, Thanks a lot. Your support matters a lot to me. 

[Raam Srinivasan Swaminathan Kalpathi]

Profuse thanks to both the panelists for their authoritative response.  Feels like the words of Sage Vashishtha and Sage Viswamitra.

[KASTURI SETHI]

Dear Sir,

Such reaction would amuse all readers. The application of this metaphor is a square peg in a round whole.

[Shilpi Jain]

Pls note that the amendment in POS provisions in the IGST Act related to intermediary is still pending. Could be expected to be done in this upcoming budget.

 

[Shilpi Jain]

If the job of the agent is more or less like an intermediary, then no GST liability will arise as per the existing provisions. Though after amendment, IGST will be liable as an import of service woudl arise.

AI Summary

Marketing fees to foreign consultants may not be intermediary services under current GST rules but pending IGST changes could alter tax treatment. The issue is whether marketing fees paid to a non resident consultant by an international freight forwarder constitute intermediary services. Experts indicate that freight forwarders and forwarding agents are distinct and that such marketing fees are not intermediary services under current GST law. However, a pending amendment to the place of supply provisions of the IGST Act may cause agentlike marketing services from abroad to be treated as imports of service, attracting IGST.