- As per section 2(5) of CGST Act“agent” means a person, including a factor, broker, commission agent, arhatia, del credere agent, 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
- Section 6 of Notification 11/2017 deals with Distributive Trade Services
- Heading 9961 deals with Services in wholesale trade and is taxable @ 18%. As per Explanation attached to Services in whole sale trade
-This service does not include sale or purchase of goods but includes: –
Services of commission agents, commodity brokers, and auctioneers and all other traders who negotiate whole sale commercial transactions between buyers and sellers, for a fee or commission’
– Services of electronic whole sale agents and brokers,
– Services of whole sale auctioning houses
- Heading 9962 deals with “Services in Retail trade” and is taxable @ 18%. As per Explanation attached to Services in retail trade
This service does not include sale or purchase of goods
- However under Heading 9986 services by commission agent for sale or purchase of agricultural produce, tax is chargeable at NIL rate. And also in Sl No. 54 of Notification 12/2017, it is exempted from tax.
- Whether agents are required to be compulsorily registered without any threshold exemption ?
- As per opinion of the author, As per section 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 are compulsority required to be registered.
Note:
a) However, whether S. 24(vii) shall not apply where agent is earning commission from exempt items. As per section 2(108), “taxable supply” means a supply of goods or services or both which is leviable to tax under this Act;. Hence S.24(vii) shall apply to commission income from exempt items also because they are leviable to tax under this Act but levied at NIL rate u/s 11 read with Notification 2/2017-CTR and 12/2017-CTR
b) Commission Income shall be taxable from Re. 1 only if services are being
provided on behalf of other taxable person. Since Commission services in distributive trade are generally provided on his own account and not on behalf of other taxable person, thresh hold exemption shall be applicable and hence S. 24(vii) shall not apply. However, if this commission agent is himself an sub agent then he can be said to be providing services on behalf of other taxable person.