Earlier, under the service tax law sub brokers not liable to pay service tax as liability of sub broker was discharged by main broker. They were not liable to get registered.
Now under GST regime, agents/ sub brokers are liable to get themselves registered due to provision of compulsory registration as defined in The Central Goods and Services Tax Act, 2017.
U/s 24 (vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise.
Section 2(5) of The Central Goods and Services Tax Act, 2017 provides for definition of agent as follows: “agents” means a person including a factor, broker, commission agent, arhatia, del credere agent, or an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another.
In terms of provisions of Section 2(13) of the IGST Act, 2017 Intermediary means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account
In lay man language broker is an intermediary or negotiator in the contracting of any type of bargain, acting as an agent for parties who wish to buy or sell stocks, bonds, real or personal property, commodities, or services. A distinguishing feature between an agent and a broker is that a broker acts as a middleperson. When a broker arranges a sale, he or she is an agent of both parties. The GST Act clubs all intermediaries as ‘agents’ who carries on the business of supply or receipt of goods and/or services on behalf of another and clubs these entities together with commission agents, brokers, etc.Online GST Certification Course by TaxGuru & MSME- Click here to Join
Thus we can conclude that:
You will raise to your broker the following bill.
Total Commission Rs. 1,00,000/-
Add CGST @ 9 % Rs. 9,000/-
Add SGST @ 9 % Rs. 9,000/-
TOTAL —-> Rs. 1,18,000/-
This Rs. 18,000/- you will have to deposit to the government account. If you have any input credit you can adjust the same. There will be no change in dealing with your customers. There is no charging to the customers.
Furthermore, if you are thinking not to get registered also the main brokers are still liable to pay GST on reverse charge for commission paid to sub broker/ franchisee. Hence it is advisable to get registered unless any specific notification or clarity not issued regarding non applicability og GST on Sub broker/ Agents etc.
The above views and the opinion expressed or implied are on the knowledge of the author and the individual or company is advised to take due care and judgement before taking informed decision.