A Singapore based Company “Singapore Inc.” has its sister concern company “India Inc.” based in India. Staff of India Inc. introduces Indian customers to Singapore Inc. Singapore Inc. sells the goods directly to Indian customers. Since India Inc. has introduced the customers, Singapore Inc. gives commission to India Inc. How will GST flow under this transaction?
Who is an intermediary?
According to sec 2(13) of IGST Act, “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 our example, since the India Inc. only introduces the customers to Singapore Inc. and doesn’t supply such goods on own account, India Inc. will be considered intermediary under GST Act.
Place of Supply in case of intermediaries
In case of intermediaries, the place of supply will be the location of the supplier of the services.
Thus, if India Inc. is registered in Mahasrashtra, the place of supply related to intermediary services will be Maharashtra.
Since place of supply is in Maharashtra and the location of supplier is also Maharashtra, CGST & SGST will be applicable on the transaction. Thus India Inc. will charge CGST & SGST on the commission amount in the invoice raised to Singapore Inc.
Can India Inc. avail the GST amount as input tax credit?
This is GST payable for India Inc. India Inc. can set off any other input tax credit against this GST amount, and pay the remaining GST to the government.