03 April 2018
Commission agent is liable for two transactions for GST. First of all the Commission Agent is jointly and severally liable for the GST on the goods or services of the Principal for which he is intermediary. The Principal has to issue a tax invoice to the commission agent for 90% of the value the commission agent is expected to realize for the goods if sold to an unrelated party. He gets the ITC on this. If principal does not pay the tax he is jointly and severally liable. When he sells the goods he has to charge the GST in full and claim ITC and pay the difference. This is the responsibility of the Commission agent and even if the Principal sells the goods directly to customer the place of supply is deemed to be that of the commission agent and when commission agent bills to the customer then the place of supply is the location of customer. This part of the commission agents dealings is not counted in his turnover for income tax but as far as GST is concerned it is part of aggregate turnover and irrespective of aggregate turnover the commission agent has to register as there is no threshold. The second transaction of the commission agent is his commission or fee on which he has to charge GST at 18%. This is his turnover for income tax purpose and he can use the ITC from his other expenses like office expenses, phones etc. while adjusting liability of GST on his commission. His principal is not jointly and severally liable for the GST on the commission amount. Principal can claim the ITC for tax paid on commission in their GST output tax liability. GST has made life complicated for commission agents.
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