Intermediary Services under GST law: A Detailed Explanation

Intermediary services are services that are provided by an intermediary to facilitate the provision of goods and services between two or more parties. Under the new Goods and Services Tax (GST) law, intermediary services have assumed great importance, as they are subject to tax under the GST regime. This article will provide a detailed understanding of intermediary services under the GST law.

Intermediary services are defined as services that are provided by an intermediary to a recipient located outside India. The intermediary could be a broker, an agent, or any other person who arranges or facilitates the supply of goods or services between two or more parties. The intermediary could also be involved in the provision of ancillary services such as transportation, warehousing, or insurance.

Under the GST law, intermediary services are subject to tax at the rate of 18%. However, if the intermediary is located outside India, and the services are provided to a person located outside India, then the services would be considered as exports, and no tax would be levied.

It is important to note that intermediary services are different from commission or agency services. Commission or agency services are services that are provided by a commission agent or an agent for the sale or purchase of goods on behalf of the principal. In these cases, the commission or agency is charged at the rate of 5% under the GST law.

Intermediary services are also different from support services. Support services are services that are provided to a business to facilitate its day-to-day operations. These could include services such as accounting, legal, or IT support. Support services are subject to tax at the rate of 18%.

When it comes to intermediary services, it is important to understand the place of supply. The place of supply refers to the location where the services are provided. In the case of intermediary services, the place of supply is usually the location of the recipient. This means that if the recipient is located outside India, the place of supply would be outside India, and the services would be considered as exports.

Intermediary services are also subject to GST registration. If the total value of intermediary services provided by a business exceeds Rs. 20 lakhs in a financial year, the business is required to register for GST. The business would also need to file regular GST returns, and comply with all other GST regulations.

In conclusion, intermediary services have become an important aspect of the GST law. It is important for businesses to understand the tax implications of intermediary services, and comply with all applicable regulations. By doing so, businesses can avoid any penalties or fines, and ensure smooth operations under the GST regime.