My query is around applicability of GST on a referral transaction.
Company A referred us a Client. As a good will gesture, we are rewarding the Company A with a referral gift amount. There is no transaction that has taken place between Company A and us, neither has Company A done any work for the client on behalf of us, so the concept of commission doesn't apply here as per my understanding.
This is something we are just gifting the company A when there is no work actually carried out between us and them. Is GST applicable on this amount we are paying them? And does company A need to raise an invoice when no work is done?
To add some context, we are part of other referral schemes we have joined as well. As an example, payment gateways like instamojo, razorpay etc. pay us referral amounts every now and then without we raising any invoices. These are for referrals we have made to them where the customers register with them. How are these being paid without GST being applied?
CAclubindia
