06 April 2021
A PERSON HAVING COMMISSION INCOME FROM POSTAL DEPARTMENT (POST COMMISSION AGENT) STARTED BUSINESS AND OBTAINED NEW GST REGISTERATION NUMBER FOR THAT BUSINESS, WHETHER HE IS LIABLE TO PAY GST ON COMMISSION INCOME RECEIVED FROM POSTAL DEPARTMENT ?
07 July 2024
Income received as commission from the Postal Department by an individual is typically classified under the category of business income or professional services, depending on how it is accounted for and the nature of the arrangement. Here’s how GST applies in such a scenario:
1. **Nature of Income**: Commission income earned from the Postal Department is considered as income from services. If this income is earned by an individual who has obtained a GST registration for their business, it would fall under the ambit of GST if the following conditions are met:
- **Threshold Limit**: The individual's aggregate turnover (including commission income and any other business income) exceeds the threshold limit for GST registration. As of now, the threshold limit for GST registration for service providers is Rs. 20 lakhs (Rs. 10 lakhs for special category states).
- **Taxable Supply**: The commission income should qualify as a taxable supply under GST. This means that it should be provided in the course or furtherance of business and for a consideration (which can include monetary or non-monetary considerations).
2. **GST Liability**: If the individual’s aggregate turnover exceeds the threshold limit, they are required to register for GST and charge GST on taxable supplies made by them. In the case of commission income received from the Postal Department:
- **Place of Supply**: The place of supply rules will determine whether IGST (Integrated GST) or CGST (Central GST) + SGST (State GST) is applicable.
- **Tax Payment**: The individual would be required to pay GST on the commission income received from the Postal Department at the applicable GST rate (which depends on the nature of service provided) and deposit the tax collected with the government.
3. **Exemptions or Threshold**: It’s important to note that certain services are exempted from GST or are subject to special provisions. For commission income, if it is exempted or covered under a special provision, the individual may not need to charge GST. However, if it falls under the taxable category, GST obligations apply.
In summary, if the individual has obtained a GST registration for their business and their commission income from the Postal Department qualifies as a taxable supply under GST, they would be liable to charge GST on such income and comply with GST filing requirements as per the GST laws. It is advisable to consult with a tax advisor or GST consultant to determine the exact GST implications based on the specific circumstances and nature of income.
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