Special provisions for agents have been included in the GST. To begin, regardless of yearly aggregate turnover in a financial year, agents must register for GST. Thus, GST Registration is an important aspect for agents to conduct business. In this article, we will discuss the detailed process of GST Registration for Commission Agents.
Who is an Agent under the GST Act?
A factor, broker, commission agent, agent, auctioneer, or any other commercial agency, by whichever term considered, who engages upon a trade of supplying or receiving goods or services or both on behalf of another one is defined as an agent under the GST Act.
In basic terms, a “commission agent” is someone who works on behalf of an individual to stimulate the buying and selling of products, or the supply or receiving of services, for a fee. The major types of an agent are as follows.
- A commission agent who gets compensated for transactions involving two or more people. He is not involved in the deal. For example, an estate broker.
- Similarly, a pure agent is someone who makes a payment on behalf of another individual and exclusively receives compensation for that payment. For example, Stock Brokers.
Is GST Registration for commission Agents mandatory?
Regardless of turnover, a Commission Agent must get Compulsory Registration under Section 24(vii) of the CGST Act. As a result, the Rs.20 lakh threshold limit set out in section 22(1) of the CGST Act need not apply to an Agent. Thus, he or she must mandatorily obtain GST Registration.
A rate of 18 percent GST applies to the commissions. GST is also applicable if a GST-registered individual receives a commission for a transaction that is not part of his typical business.
Mandatory Compliances after getting GST Registration for Commission Agents
The following GST Returns must be filed by a GST Registered broker and a commission agent.
- GSTR-3B – Monthly summary return.
- GSTR-1 – Return for reporting outward supplies.
- GSTR-9 – Annual return.
- GSTR-5 and GSTR-5A – Non-resident foreign taxpayers.
Furthermore, all Commission Agents are required to maintain accounts displaying the following-
- The manager or client’s authorization to supply/receive products on his behalf.
- The amount and cost of goods/services obtained on the client’s behalf.
- Information on accounts is provided to the client in detail.
- Taxes paid on behalf of the client on the procurement of goods/services.
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