Please let us know the applicability of GST on Commission paid for export orders (1) in case commission invoice issued in Foreign currency by foriengn commission agent - GST reverse charge will be applicable? (2) in case commission invoice issued in INR by Indian commission agent for export orders - Will agent be charged GST and ITC of which will be available?

ANSWER

Facts of the case:

Commission is paid for export orders by an Indian Company to :
(1) Foreign Commission Agent
(2) Indian Commission Agent

To check GST applicability on above.

Law applicable:

Sub section (8) of section 13 of IGST dictates the Place of supply in case of Intermediary services as follows;

"(8) The place of supply of the following services shall be the location of the supplier of services, namely:''

(a) services supplied by a banking company, or a financial institution, or a non-banking financial company, to account holders;

(b) intermediary services;

(c) services consisting of hiring of means of transport, including yachts but excluding aircrafts and vessels, up to a period of one month."

Interpretation:
As per section 13(8)(b) Place of supply in case of Foreign Commission Agent would be the location of the supplier of services i.e outside India. Therefore no GST will be levied on this transaction.
Similarly Place of supply in case of Indian Commission Agent would be location of supplier of services i.e India. Therefore this transaction will be chargeable to GST and ITC of the same would be available to the Indian Company. The Indian Commission Agent can claim ITC of his input, input services and capital goods used in course or furtherance of business.

Conclusion:
GST will not be applicable on Foreign Commission Agent providing services of export to Indian Company.
GST will be applicable on Indian Commission Agent providing services of export to Indian Company. (Reply dt.31/08/2021)