Goods and Service Tax (GST) is an indirect tax that has been levied in India since July 2017. One of the key features of GST is the establishment of an intermediary system. In this article, we will explore the various aspects of intermediary services under GST and provide a comprehensive analysis.
What are intermediary services under GST?
Intermediary services under GST refer to services that are provided by a third-party intermediary that acts as an agent between the supplier and the recipient of goods or services. The intermediary facilitates the supply of goods or services, but does not take ownership of the goods or services.
1. Online marketplaces such as Amazon and Flipkart that provide a platform for sellers to sell their goods.
2. Transport agents that provide transportation services for the movement of goods.
3. Clearing and forwarding agents that assist with the movement of goods through customs.
4. Online travel agencies that provide booking services for air tickets, hotel rooms, and other travel services.
Before the implementation of GST, intermediary services were subject to multiple taxes such as service tax and value-added tax (VAT). GST has brought about a significant change in the taxation of intermediary services. Intermediaries are now required to register under GST and pay tax on the commission earned on the supply of goods or services. The rate of tax on intermediary services is 18%.
1. Simplification of tax structure: GST has simplified the tax structure for intermediary services by eliminating multiple taxes and introducing a single tax system.
2. Increased compliance: GST has made it mandatory for intermediaries to register under GST, which has increased compliance.
3. Boost to e-commerce: GST has provided a boost to e-commerce by creating a level playing field for online marketplaces and brick-and-mortar stores.
Intermediary services play a crucial role in the supply chain of goods and services. GST has brought about significant changes in the taxation of intermediary services, which have simplified the tax structure and increased compliance. Intermediaries are now required to register under GST and pay tax on the commission earned on the supply of goods or services. The rate of tax on intermediary services is 18%. Overall, GST has had a positive impact on intermediary services and has provided a boost to e-commerce.
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