Term Intermediary under GST

Meaning of term Intermediary under GST


The details about Intermediary under GST explained here.

Concept of Intermediary Under GST:

In terms of provisions of Section 2(13) of the IGST Act, 2017, “Intermediary” means a broker, an agent or any other person, by whatever name called, who arranges or facilitates the supply of goods or sservices or both or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account.

The following aspects need to be noted:

  • An intermediary arranges or facilitates supply of goods or services or both, or securities between two msore persons. For e.g.: Travel Agent
  • Two supplies are generally involved:
  • Supply between the principal and the third party; and
  • Supply of his own service to his principal – generally for a fee or commission;
  • An intermediary cannot alter the nature or value of supply, which he facilitates on behalf of his principal;
  • The consideration for an intermediary’s supply is separately identifiable from the main supply that he is arranging and is in the nature of fee or commission charged by him;
  • The test of agency must be satisfied between the principal and the agent i.e. the intermediary

In simple words, an intermediary is like a broker, acting as an agent for parties who wish to buy or sell stocks, bonds, real or personal property, commodities, or services. A distinguishing feature between an agent and a broker is that a broker acts as a middleman. The GST Act clubs all intermediaries as ‘agents’ who carries on the business of supply or receipt of goods and/or services on behalf of another and clubs these entities together with commission agents, brokers, etc.

Registration for an intermediary:

Sec 24 (vii) states , persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise, have to mandatorily take registration irrespective of their amount of turnover.

As per the above provision, threshold limit of Rs.20 lakh (Rs.10 lakh in specific states) is not applicable for intermediaries.

Place of Supply

For intermediary services i.e. a broker, an agent or any other person, by whatever name called, who arranges/facilitates the supply of a service or the supply of goods, between two or more persons, place of supply is - Location of the service provider.

Valuation of service involving intermediaries:

As per Sec 15 (2) of CGST Act, the value of supply shall include incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services.

Thus as per the above provision, amount of commission will be added to the price of goods/service in order to arrive at the taxable value. GST will be charged on the consolidated value.

Treatment of commission income of the intermediary

An intermediary shall charge commission from the principal for the services rendered on his behalf.  The commission will be subject to GST.

The information on Intermediary under GST is detailed above.   Comment below your thoughts on Intermediary under GST.


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