Commission received from abroad
This query is : Resolved
22 December 2017
Dear Sir, I Received Commission of USD 13000.00 from singapore, they deducted TDS @ 5% on that, and rest amount trfd. to my account in INR. Should I raise Commission Invoice to Singapore Client. Please tell does it attract GST liability. also the entry for both Commission Due and Commission Received in bank Regards SATBIR SINGH
Guest
Guest
(Expert)
29 December 2017
For what purpose you have received commission
19 July 2024
Based on the information provided, here are the responses to your queries regarding the commission received from Singapore, TDS deduction, GST liability, and accounting entries:
### 1. Invoice Requirement and GST Liability
- **Invoice Requirement**: Yes, you should issue an invoice to your Singapore client for the commission received. This is a standard business practice for commission on sales (ORC - Outward Remittance Commission).
- **GST Liability**: Since the commission received is for services provided outside India (considering it's commission on sales from Singapore), it qualifies as an export of services under GST. Export of services is considered a zero-rated supply under GST, meaning it attracts a GST rate of 0%. Therefore, technically, you do not have to charge GST on this transaction.
### 2. Accounting Entries
Assuming the transaction is in INR after conversion from USD:
- **Commission Due Entry**:
- Debit: Commission Receivable (Asset Account)
- Credit: Sales Commission Income (Income Account)
- **Commission Received Entry**:
- Debit: Bank Account (for the net amount received after TDS deduction)
- Debit: TDS Receivable (Asset Account, if TDS is not deposited yet)
- Credit: Commission Receivable (to clear the receivable)
- Credit: TDS Payable (Liability Account, representing TDS deducted and to be remitted to tax authorities)
### Important Points to Note:
- Ensure that the invoice to the Singapore client includes all required details such as your and the client's details, description of services (commission on sales), commission amount in USD, exchange rate used for conversion to INR, and TDS deduction details.
- Verify the TDS deducted and ensure it is correctly reflected in your income tax returns in India.
- Keep proper documentation of the transaction, including the invoice, proof of TDS deduction, and the transaction details for future reference and audits.
If you have any specific details or variations in the transaction, it's advisable to consult with a tax professional or CA to ensure compliance with both income tax and GST regulations in India.
### 1. Invoice Requirement and GST Liability
- **Invoice Requirement**: Yes, you should issue an invoice to your Singapore client for the commission received. This is a standard business practice for commission on sales (ORC - Outward Remittance Commission).
- **GST Liability**: Since the commission received is for services provided outside India (considering it's commission on sales from Singapore), it qualifies as an export of services under GST. Export of services is considered a zero-rated supply under GST, meaning it attracts a GST rate of 0%. Therefore, technically, you do not have to charge GST on this transaction.
### 2. Accounting Entries
Assuming the transaction is in INR after conversion from USD:
- **Commission Due Entry**:
- Debit: Commission Receivable (Asset Account)
- Credit: Sales Commission Income (Income Account)
- **Commission Received Entry**:
- Debit: Bank Account (for the net amount received after TDS deduction)
- Debit: TDS Receivable (Asset Account, if TDS is not deposited yet)
- Credit: Commission Receivable (to clear the receivable)
- Credit: TDS Payable (Liability Account, representing TDS deducted and to be remitted to tax authorities)
### Important Points to Note:
- Ensure that the invoice to the Singapore client includes all required details such as your and the client's details, description of services (commission on sales), commission amount in USD, exchange rate used for conversion to INR, and TDS deduction details.
- Verify the TDS deducted and ensure it is correctly reflected in your income tax returns in India.
- Keep proper documentation of the transaction, including the invoice, proof of TDS deduction, and the transaction details for future reference and audits.
If you have any specific details or variations in the transaction, it's advisable to consult with a tax professional or CA to ensure compliance with both income tax and GST regulations in India.
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