We are a agent company registered under GST. We do hotel booking outside India only for Clients In India who send their employees outside India for project work.We do the booking on international supplier websites and receives commission from them once the guest checks out.We receive the amount in our Indian Bank account.We wanted to know whether we are liable to pay GST on this transaction and if yes at @ rate as we bill clients for the hotel booking amount 5% as we come under tour operator services/Reservation services with NO ITC.
Scenario 2 2) The clients does hotel booking directly from foreign sites say e.g Hotels.com ,Hotel.com doesnot charge any GST amount on the booking and the clients needs to pay Say USD 100 to hotels.com.
The same booking we do on behalf of client from Hotels.com itself and we also pay hotels.com USD 100 but we charge client USD 95 since we receive commission from Hotels.com after check out.so our outflow is USD 100 initially and we get only USD 95 abd receives commission 10 after wards
Do we need to charge GST on USD 95 to client, if yes then clients wont do business with us as it become expensive for them since we charge GST on USD 95 as per Indian laws and then do we need to pay again GST on the commission amount which we receives after checkout.
07 July 2024
In your scenario, let's address the GST implications for your agent company based on the services provided:
**Scenario 1: Booking on International Supplier Websites**
1. **Commission from International Suppliers:** - When you receive commission from international suppliers (e.g., Hotels.com) for hotel bookings made for Indian clients, this commission income is received in your Indian bank account. - Since the service (hotel booking) is provided outside India and the recipient of your service (your clients in India) is also located in India, this transaction is considered an export of services under GST.
2. **GST Liability:** - According to GST laws, export of services is generally considered a zero-rated supply. This means that you can choose not to charge GST on the invoice to your clients. - If you decide to charge GST (assuming you opt to charge 5% GST), you must issue a tax invoice and pay the GST collected to the government.
3. **Input Tax Credit (ITC):** - Since your services fall under the category of tour operator services/reservation services with no ITC, you cannot claim input tax credit on the GST paid on your business expenses.
**Scenario 2: Direct Booking by Clients on Foreign Websites vs. Booking through Your Company**
1. **Direct Booking by Clients:** - If clients book directly through websites like Hotels.com, they pay USD 100 without any GST because the service is provided outside India.
2. **Booking through Your Company:** - When you book on behalf of clients through Hotels.com, you pay USD 100 upfront and receive a commission of USD 10 after the guest checks out. - You charge the client USD 95 for the booking (considering your commission). - The GST implication here depends on whether you choose to charge GST on the invoice to your client (USD 95). If you do charge GST, it would be at the applicable rate (5% as per your example).
3. **GST on Commission Income:** - The commission income you receive from Hotels.com is part of your taxable turnover. If you charge GST on your invoice to the client (USD 95), then GST applies on the invoiced amount.
**Key Considerations:**
- **Zero-Rated Export:** Since your primary service involves facilitating bookings outside India for Indian clients, you typically export services under GST. This allows you the option to charge GST at 0% (zero-rated) or 5%, if you opt to charge GST.
- **Client's Perception:** Charging GST on the invoice may increase costs for your clients, affecting their decision to book through your company. However, it's essential to comply with GST regulations and clarify the total amount including GST upfront to avoid misunderstandings.
- **GST on Commission:** Any commission income received is subject to GST, and you need to account for this in your GST returns.
To ensure compliance and optimal business operations, it's advisable to consult with a GST expert or tax advisor who can provide tailored advice based on your specific business model and transactions. They can also assist in structuring your invoices and understanding the correct application of GST on your services.
CAclubindia
