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Whether commission charged on global sales by E-marketplaces websites is under the purview of RCM


> Commission and other charges are deducted by global e-marketplace from the export sales made by Indian Seller through their portal.

> E-marketplaces generally don’t have permanent establishment in India and hence defined as located in ‘non taxable territory’ as per provisions of CGST/IGST Act.

> Whether commission and other charges subject to RCM under GST Act? Since uniform solution is not possible in case of all the E-marketplace. We have tried to bring facts and circumstances; in the case of Amazon USA.


1. Amazon USA is a facilitator and does not sell goods and services on his account, hence it qualifies as an Intermediary as per Section 2(13) of IGST Act, 2017.

2. Place of Supply in case of Intermediary Services is ‘Location of Supplier’, i.e USA, as per section 13 of IGST Act, 2017.

3. Section 2(11) of the IGST Act explains Import of Service as follows:

“import of services” means the supply of any service, where—


the supplier of service is located outside India;


the recipient of service is located in India; and

(iii) the place of supply of service is in India;

In our instant case, the Place of supply is USA, i.e outside India (non taxable territory), hence the aforesaid transaction is does not qualifies as Import of Service.

4. As per section 2(109) “Taxable territory” is being defined as the territory to which the Act applies. Further Section 1(2) explains that the Act applies to whole of the India. Thus as per our view, the “Supply” having Place of Supply outside India, and Service provider being outside India, is out of the scope of the CGST Act 2017 and further out of the ambit of Scope of Supply as defined in Section 7 of CGST Act 2017.

GST under RCM on commission charged on global sales by E-marketplaces websites

5. Therefore, as per our viewpoint, CGST Act does not empower Government to charge GST on service having place of supply outside India and service provider being located in non-taxable territory, under RCM, and hence we conclude that it shall the subject transaction shall not be subject to Reverse Charge Mechanism.

6. But there is a second view point of depositing GST, followed by some on the basis of RCM Entry no. 1 of Notification no. 10/2017-IGST(R), the said entry is reproduced below:

Category of Supply of Services Supplier of service Recipient of Service
Any service supplied by any person who is located in a non-taxable territory to any person other than non-taxable online recipient. Any person located in a non-taxable territory Any person located in the taxable territory other than non-taxable online recipient

But in our opinion, literal interpretation of the aforementioned entry should not be followed as notifications cannot supersede the Act passed by Parliament.


Entry no. 1 of notification no. 10/2017 IGST(R) and the provisions of the Act are in contradiction with each other. In our opinion law should prevail over notification, but this might be an issue of litigation in future. We might not get relief/benefit from lower tax authorities unless judicial precedents ratify our viewpoint. Since ITC can be availed by paying RCM GST, one may conservatively deposit the tax, or the other way around, be open to litigate.

Disclaimer: Any views or opinions presented in this article are solely those of the author and do not necessarily accepts any liability for the consequences of any action taken on the basis of information provided.

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May 2024