Impact of GST on Commission Income and Agents

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September 27, 2019

GST on Commission Income and Agents

The Goods & Services Tax is now the only indirect tax being levied on various supplies in India. GST is also applicable to agents, including any income earned through commissions.

This article will tell you everything you should know about the applicability of GST on commission income and Agents.

GST on Commission in India

Let’s first understand the major implications.

  • GST rate on commission income: GST is mandatory for all commission agents, whether their annual turnover is above the threshold or not.
  • GST registration is compulsory for every person who makes taxable supplies of goods and services on behalf of another taxable person.
  • GST on brokerage: The tax will be applicable on any income earned through commission or brokerage services.
  • TDS is also deductible on GST bill relating to a commission value of a supply.
  • The rate of GST on commission (agent) services is 18 per cent.
  • Input credit is available for the GST on commission paid on these services.
  • GST is not applicable to foreign commission agents.
  • An agent is a person who is paid a commission for making supplies of goods and/or services on behalf of someone else (Principal). This includes brokers, auctioneer, commission agents and all other types of agents.
  • A pure agent under GST is “someone who while making a supply to the recipient, also receives and incurs expenditure on some other supply on behalf of the recipient and claims reimbursement (as actual, without adding it to the value of his own supply) for such supplies from the recipient of the main supply.”
      1. A pure agent has to sign an official agreement with the recipient, according to which he/she will also incur any expenditure that may occur during the supply.
      2. He doesn’t hold any right to the ownership of the goods or services being supplied.
      3. Doesn’t use any such goods or services for his personal interest.
      4. Receives the actual supply value in addition to the reimbursement for any additional supply provided by him on his account.

    Download PDF for Pure Agent Concept in GST

  • The additional expenditures incurred during a supply on behalf of the recipient will not be considered a taxable supply and so should not be taken into account while calculating taxes. This is applicable only to the following conditions:
    1. The supplier is a pure agent acting on behalf of the recipient and acts by recipient’s authorization when making payment to a third party.
    2. Any such payment made by a pure agent to the third party should be separately mentioned in the invoice received by the recipient from his pure agent.
    3. The supplies received by a pure agent from the third party should be in addition to the actual supplies serviced by him on behalf of the recipient.

For example, when a businessman hires an agent to perform some kind of service, they decide on a value amount for the actual service. However, if the agent has to hire some external help or make some other supply on behalf of the businessman, he can claim its reimbursement from the businessman. This will not be included in the total supply value. GST on commission agents will only be applicable to the actual value of supply.

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63 Replies to “Impact of GST on Commission Income and Agents”

      1. Sir we are supplier company of GGRC (Agriculture Govt Sector) there are 12% GST in irrigation. Dealer working with us and we are paying commission to dealer as per law we are deducting TDS but my question is should i deduct GST also and by what % ??? i read somewhere abt limit is 20 lacs so is it only commission income or total turnover in the year ???

        1. If your total turnover exceeds Rs. 20 lakhs, not only commission income, then GST registration needs to be taken. In case you are registered under GST, then on commission income GST @ 18% needs to be deducted.

  1. I am taking commission from a business worth rs 500000 p.a. I take comission on the sales made to my clients. I dont send any goods and i dont recieve any payment. I am only like a guarantor. Am i liable to pay gst on rs 500000.

      1. Kotak MLI deduct my gst @15 in name of RCM as i. am not registered in gst
        Is this fair practice by kotak mah life ins.

  2. Our company receives a commission for Rs. 22 lakh (for selling the electrical items) in March, 2018. What will be the hsn code i have to mention on the bill

  3. We are exporters to different countries and we hire commission agents. One of the commission agent is in India and is not a GST dealer. He has raised a bill without GST. what is the impact of this

  4. Sir.
    How to fill GSTR3B FORM IF WHEAT PURCHASE FROM FARMER (UNREGISTERED) AND SELL TO GOVT.
    FOR COMMISSION.
    AND commissions is free of gst.
    Please reply

  5. I have a sole proprietorship with GST and my only income is from commission. If I receive commission & pay GST on it can I claim it as expense deduction else I will have to pay tax on commission income and also GST increasing my tax liability to around 48%

  6. Dear Sir,

    I am Thomas from Kerala, working as Car Loan Direct Selling Agent of a Bank. I am registered under GST, now Bank deducting 18% GST from our all commissions and advised to claim as refund . Is it possible in GST to get refund as same like TDS ( my Turnover is below 10 Lakhs). Kindly advice

    1. No, refund is not possible under GST as tax paid on indirect income is your expense and not refundable. Further, even if you were registered under GST then refund is not possible, only you can claim input tax credit of the same.

    1. Yes, GST is applicable on commission income received from outside India under reverse charge and tax to be paid by recipient of service.

  7. I run a coaching institute , I charge teachers 20% of the fee paid by students and 5% of fee for administrative work , on what amt , should I pay GST

  8. We provide online technical support and training to overseas clients and receive payment in dollars. What rate of GST should be applied from foreign clients.

  9. I am new agent of hdfc life and other financial institutions, my income is below 10 lakhs. Is I am liable to pay gst. Hdfc life officials deducting gst from my commission kindly give the reply.

  10. Dear Sir, we are raised gst commission bill for indian exporter ,but exporter said that
    we are not applicable gst , pls give me details ?

  11. I am Insurance agent. since I’m working under the Two wheeler dealer. I have received the commission through them. Insurance company has been deducted the TDS on my Commission. now what is the process of my GST. Whether should I pay the GST Directly or By Reverse Charge Mechanism. ….

  12. I have a proprietorship firm and represent foreign companies for marketing their products in India.
    On successful sales, I receive commission in foreign exchange.
    Is GST applicable?

  13. we are a trading firm we paid to commission on sale in f.y. 2018-19 to unregistered person what is impact in gst law pl advice

  14. I earn Commission from sale of life insurance products. I also earn tuition fees by teaching 9th and 10th standard students.

    The insurance company deducts TDS and GST while the coaching Institute deducts only TDS. My total income from both sources is less than 2,50,000 for Financial Year 2018-19. Can I get refund of the GST and TDS amounts deducted by both organizations?

  15. sir my annual income doesn’t go beyond 20 lac’s, if i receive commission of 2 lac’s am i supposed to pay gst on commission received

  16. I pay govt franking challan on behalf of customers from my current account so they give me commission of Rs. 500 on Each Franking Challan Which ever is the amount to pay . So My commission Becomes 72k Yearly so Am i Applicable For GST

  17. Life insurance company deduct GST & TDS both from life insurance commission. is it ok?? under which section ?? total commission income during the year is below 3 lakh

  18. in case of direct selling agent where sales made at a particular point and in above every level is getting commission for that one sale….. so here how much GST IS APPLICABLE

  19. Hi, I am a commission agent for a foreign company. My job is just to show their catalogue in India. If a customer is interested he can place the order directly with the company stating my reference. I recieve commission of less than 5% from the company for all such sales however there is no proof of actual sales done by me since at time customers choose not to take my Refernce. I receive this income in the form of convertible foreign currency. Do I need to raise a GST invoice?

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