commission
Query (Issue) Started By: – Madhavan iyengar Dated:- 13-1-2019 Last Reply Date:- 17-1-2019 Goods and Services Tax – GST
Got 6 Replies
GST
X based in Maharahstra India has a GST regn X helps in procurement of orders for its overseas clients based in US and Germany X receives commission from the clients in US and Germany for the procurement of orders. Thus X is acting as intermediary and accordingly based on POPS the location is Maharashtra state.
In the above case X will raise invoice fro commission on the overseas clienst ,
Issues: X should discharge which tax IGST or CGST/SGST and can it treat the amount of commission received as inclusive or it has to calculate the tax on the amount received. ??
Reply By KASTURI SETHI:
The Reply:
Dear Querist,
1.IGST
2. Why the question of cum tax ? Will X receive tax from foreign client ? Is tax already included in the amount of commission ? Is there such agreement to this extent ? Pl. clarify.
Reply By SHARAD ANADA:
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
services where the location of supplier of services or location of recipient of services is outside India.
Now, we are discussing whether intermediary services is Inter-State or Intra-State where the location of supplier or location of recipient is outside India as there is ambiguity on the same.
Considering the supplier is located in Maharashtra, the place of supply would also be Maharashtra as per Section 13(8) of IGST Act.
In the present transaction, the place of supply and location of supplier are in the same state. One may argue that this transaction would qualify to be as an Intra-State supply as per Section 8(2) of IGST Act. If we carefully see, lawmakers have used the words “subject to provisions of section 12” in Section 8 of IGST Act. The literal meaning of the term 'subject to' is 'dependent upon'. Thus, when a provision is made subject to another provision, the former cannot override the later. Let us look at the legal implications of the words 'subject to proviisons of'
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
it is necessary to fulfil the condition of section 12 to fall in Section 8(2) of IGST Act. Thus, it is wrong to term intermediary services as an Intra-State supply of services in case where the location of supplier or location of recipient is outside India. This is for the reason that Section 12 is applicable only to determine place of supply where the location of supplier and location of recipient is in India and not covers the cases where the location of supplier or location of recipient is outside India.
Therefore, in this view, it shall qualify to be in the course of inter-state trade or commerce on the lines of Section 7(5)(c) as the same is a residuary entry to cover all cases not covered elsewhere.
The statutory text of section 7(5)(c) is reproduced as follows-:
Supply of goods or services or both-
a) When the supplier is located in India and the place of supply is outside India.
b) To or by a Special Economic Zone developer or a Special Economic Zone unit: or
c) In the
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
amount received has to be treated as inclusive and the formula to be applied and tax portion arrived at
Reply By Mahadev R:
The Reply:
Following is one of the 65 FAQ released on banking service. In this it is clarified that it is subject to CGST + SGST. There is a divergent view on this. Payment of CGST + SGST could be safer option.
Q.25 Would intermediary services provided to an offshore client and services provided by a banking company to its offshore account holders be treated as an intra-State supply or an inter-State supply for payment of GST?
Ans: Under clause (b) of section 13(8) of the IGST Act, 2017 the place of supply of such services is the location of the provider of services. As the location of supplier and place of supply are in same State, such supplies will be treated as intra-State supply and Central tax and State tax or Union territory tax, as the case may be, will be payable.
Reply By KASTURI SETHI:
The Reply:
Dear Sh.Mahadev R. Ji,
FAQ mentioned by you spec
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =