TMI BlogPOS - Services in relation to Intermediary services (Where either the supplier or the recipient is located outside India) [ Section 13(8)(b) of IGST Act ]X X X X Extracts X X X X X X X X Extracts X X X X ..... ting supply of goods between the foreign customer and the Indian vendor, the said services can be classified as intermediary services. As per section 13(8), the place of supply in case of Intermediary services is the location of the supplier i.e. the location of ABC Pvt. Ltd. which is New Delhi. Example 2:- I am an Indian Company who makes software and sells it outside the country. I have hired a firm (not a related party) C located abroad to facilitate the supply of software in Europe and the USA; would I be liable to pay GST on the payments that I make to this entity abroad? No. In this case, C is covered by the definition of intermediary [section 2(13) of the IGST Act, 2017]. The place of supply of such intermediary service is location of the supplier in terms of section 13(8) of the IGST Act, 2017. As C is located outside India, GST is not payable in this case. [refer the FAQ for GST on IT/ITES Qus.11] Example 3:- I am an agent in India of a foreign IT/ITES provider (principal located outside India). For agency services, I bill the principal in convertible foreign exchange. Whether GST liability arises in this case? You are an i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the Stock Exchange as part of the Unique Client Code details. Therefore, in case of domestic supplies of such services, address on record with the stock brokers shall be the location of the recipient of services in terms of Section 12(12) of the IGST Act, 2017. However, in cases where the location of the recipient is outside India, the place of supply shall be determined as per Section 13(8) of the IGST Act, 2017 i.e. as an intermediary. [refer the FAQ on on Banking, Insurance and Stock Brokers Sector Qus.81] Example 8:- Stock Brokers deal with clients who are not residents of India like Foreign Portfolio Investors, Non-Resident Indians, Persons of Indian Origin, etc. Will brokerage earned from such clients who are not resident in India qualify as export of service under Section 2(6) of the IGST Act, 2017? The stock broker being an intermediary, this situation shall be covered under the provisions of Section 13(8)(b) of the IGST Act, 2017 which provides that the place of supply shall be the location of the supplier of services. Thus such a supply will be treated as an intra-State supply and would be subject to Central tax and State tax/Union territory tax, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facilitates another supply (the main supply ) between two or more other persons and, does not himself provide the main supply. Two distinct supplies: As discussed above, there are two distinct supplies in case of provision of intermediary services; Main supply, between the two principals, which can be a supply of goods or services or securities; Ancillary supply, which is the service of facilitating or arranging the main supply between the two principals. This ancillary supply is supply of intermediary service and is clearly identifiable and distinguished from the main supply. A person involved in supply of main supply on principal to principal basis to another person cannot be considered as supplier of intermediary service. Intermediary service provider to have the character of an agent, broker or any other similar person :- The definition of intermediary itself provides that intermediary service provider means a broker, an agent or any other person, by whatever name called . . This part of the definition is not inclusive but uses the expression means and does not expand the definition by any known expression of expansion such as and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of supply of intermediary services under section 13 of the IGST Act shall be invoked only when either the location of supplier of intermediary services or location of the recipient of intermediary services is outside India. Example 1:- A is a manufacturer and supplier of a machine. C helps A in selling the machine by identifying client B who wants to purchase this machine and helps in finalizing the contract of supply of machine by A to B . C charges A for his services of locating B and helping in finalizing the sale of machine between A and B , for which C invoices A and is paid by A for the same. While A and B are involved in the main supply of the machinery, C , is facilitating the supply of machine between A and B . In this arrangement, C is providing the ancillary supply of arranging or facilitating the main supply of machinery between A and B and therefore, C is an intermediary and is providing intermediary service to A . Example 2:- A is a software company which develops software for the clients as per their requirement. A has a contract with B for providing some customized software for its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice would fall under intermediary services within the meaning of section 2(13) of the IGST Act. would depend upon the facts of the specific case. While examining the facts of the case and the terms of contract, the basic characteristics of intermediary services, as discussed in primary requirement above, should be kept in consideration. Exemption intermediary services with effect from from 01 October 2019 [ Notification No. 9/ 2017 -Integrated Tax (Rate ) dated 28 Jun 2017)] as amended. Entry No. Heading Description of services 12AA Heading 9961 Services provided by an intermediary when location of both supplier and recipient of goods is outside the taxable territory. Following documents shall be maintained for a minimum duration of five years : 1) Copy of Bill of Lading 2) Copy of executed contract between Supplier/Seller and Receiver/Buyer of goods 3) Copy of commission debit note raised by an intermediary service provider in taxable territory from service recipient located in nontaxable territory 4) Copy ..... X X X X Extracts X X X X X X X X Extracts X X X X
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