Bijay Shrestha asked 3 years ago
Collection of GST from Agent
ABC is an Indian Company and engaged in the business of Foreign Exchange and Money Transfer Business. The Company engages different individuals as their agents. These Agents collects money from customers and transfer to their family in different places/countries. For This Service, the agents collect Rs. 200 commission (Inclusive of GST) from customers for every transfer, and Bill is raised in the Name of Company (not in the name of Agent).
For this Service, the Company pays a commission to the Agent of Rs. 50 (Inclusive of GST) for every transaction but here out of this Rs. 50, the Company retains GST amount of Rs. 7.63 and pays net Rs. 42.37 to the Agent.
Now my doubts are:-
- Whether the above action of the Company is correct in respect of collection of GST from the Agent? OR RCM is applicable? That’s why the Company is collecting GST from the Agent and paying to the Government.
- I believe the Agent is required to get registration irrespective of Turnover Limit and Collect GST from the Company on commission and pay to the Government.
Please Kindly suggest.
Answer the question
Manan Jain answered 3 years ago
As per my point of view,
1. According to notification number 31/2017 CT. (R) and 10/2017 IT (R) RCM is applicable on insurance agents and recovery agents. The above mentioned agent is covered under none of these. Hence The company is not liable to pay GST under RCM. Therefore the practice of company to retain GST amount and paying net amount of commission to agent is incorrect.
2. Yes, a commission agent is required to obtain compulsory registration u/s 24(vii) of CGST Act, 2017 irrespective of it’s turnover.
