Reverse charge liability in case of overseas agent services

[pradeep kataria]

As per FA'2016, clause (b) of Sec. 13(8) of the IGST Act was deleted. Now, the place of supply of services, in case of an overseas agent's services, will be the location of the recipient. Given the fact that as per the terms of the contract, commission will be due and payable to agent once the customer remits the payment. The question is, in such a case, when the time of supply will trigger, particularly when no payment is made, or no self-tax invoice is issued, but an accounting entry is passed at the year-end in the books for providing the liability. The liability is booked in bill payable account and will be transferred to the agent account once payment is received.

AI Summary

Reverse charge liability for overseas agent services turns on time of supply when commission is booked before payment. Reverse charge liability in overseas agent services is discussed in light of the place of supply being the recipient's location after deletion of clause (b) of section 13(8) of the IGST Act. The key issue is the time of supply for commission payable only when the customer remits payment, especially where no payment is made to the agent and no self-tax invoice is issued. The text also refers to a year-end liability entry booked in a bill payable account and later transferred to the agent account on receipt of payment.