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 services 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:

  1.  An intermediary arranges or facilitates supply of goods or services or both, or securities between two more persons. For e.g.: Travel Agent
  2. 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;
  1. An intermediary cannot alter the nature or value of supply, which he facilitates on behalf of his principal;
  2. 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;
  3. 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.

For eg – Mr A is an intermediary, registered under GST, and charges commission from the principal for the supply of services on behalf of the principal. In that case, Mr A will have to make a tax invoice in the name of the principal at the end of every month and charge GST. 

If in a particular month total value sale is Rs. 2,00,000/- and Mr A’s sharing with the main principal is in the ratio - 80 : 20, then Mr A will get commission of Rs. 40,000/- plus GST @ 18%. Invoice will be raised for Rs.40,000/- plus GST @ 18%.

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We paid the foreign commission in foreign currency to the service provider against our export sales, based on the mail copy of the invoice.

Is it necessary to have the original invoice of the service provider for our record?


Export of Services : I think the explanations provided in the example of intermediary, especially when considering export of services, are confusing, incorrect and unfair!. There is confusion between the services a so called "intermediary" or "agent" may provide. As already stated by you there could be two separate and distinct services involved here both provided by the agent or intermediary, which fact is being overlooked unknowingly or cleverly and is being brushed under the carpet. This needs to be corrected and clarified.

One service is what may be provided to the foreign Principal and another may be a service that is provided to a recipient in India on behalf of the foreign Principal.

Eg. One service : An Indian company, agent, intermediary (or whatever you wish to call him) provides technical, commercial and marketing inputs to a foreign company and these inputs are used by the company to design and customise their machines for the Indian market. Other service : The foreign company needs help in India to install and commission their machines in India and the agent helps in this, or needs help for Custom clearance and the agent helps, or needs production support and the agent helps in this in the plant of the Indian buyer, so on and so forth (there could be other services all delivered in India such as trabsport of goods from port to final destination).

So here there are two distinct services provided by the intermediary or agent.. For the marketing consultancy service of customising the machines to make them suitable for the applications the Indian company (agent or intermediary) has truly provided an export service which should rightly be exempt from GST.

For the second service of helping in the installation and commissioning or other jobs done in India, the Indian company or agent has indeed provided a service in India "on behalf of the foreign company". This should involve charge of GST.

Why are we in such a hurry to confuse the whole issue and oversimplify it incorrectly by saying that the place of service is the "location of service provider" If this was so then there cannot be any export of services at all as export must be from place of supply which is India and then the service provider will be said to be located in India and hence you will say it is not an export. This does not make sense, frankly. Please do not confuse the two services and the whole issue with this oversimplification of location of service provider in location of service. It may not be so, as shown above..

We can understand that the government wants to get as much revenue as possible but it has to be in a fair way and not by making confusing, devious legislation which is so ambiguous and unclear.

Another important point, regarding GST for export of services :

It is clear that the government intends GST on services to be paid by the receiver of service and NOT by the service provider. It is also clear that the government made the service provider responsible to collect this GST from the receiver of services and to pay it to them. This is fine as far as India is concerned, but not justifiable where the receiver of services is indeed in foreign lands as explained in the example above for consultancy. Reason : The foreign lands are outside the jurisdiction of the Government of India. If the government makes such a rule it is not only bad in law (as not applicable outside India) but also gross injustice to the service provider from India as he has to pay from his own pocket and gets no offset of ITC.

How can the government justify this rule. How can the government insist on applying their rule in lands which are outside their jurisdiction... and when they cannot apply the same how can they justify charging the provider of service for this tax. It is like saying "I am unable to get it from overseas but I have your arm to twist and I want my pound of flesh anyhow, by hook or by crook, so I will make a rule and will charge you for the service tax".

This matter is highly unfair and must be taken up with the policy makers to change the policy. Most foreign companies refuse to pay this GST as they do not get any offset. It is okay to apply the rule in India to avoid service provider and service receiver from colluding with each other and avoiding payment of service tax but must not be applied for services provided to foreign companies.


I am a trader I purchase my goods on IGST from Delhi and my registration is in Bihar and I supply my goods in whole of Bihar since the nature on my product is direct delivery I have to dispatch the goods directly from company to party whole container, now my issue is that
The billing is in the name of my firm only and same is on the shipping and delivery address and bilty as I cannot share the the party's details with the company to solve this issue I issue a further bill to my party along with new intrastate permit before entering Bihar which the driver carries along with the company's bill in my firms name but the bill does not have orignal signature as the pdf is sent on mail. Can someone point my mistakes in this process and ways to correct it.


Whether a Tour Operator service falls under Intermediary?

If a tour operator located & registered in Gujarat provides service to a person outside India during his visit to India for the business project which includes Booking of Air ticket, Cab, Hotel etc. Moreover, all payment at various places including all these bookings payment is made by an intermediary and later he prepares an invoice for these charges and a % of commission in addition to all payment which is paid by original recipient to tour operator in INR.

Whether this is an Intermediary service?


Dear Sir/Madam

I’m explaining in detail so that you can understand my problem and tell the me nature of my work

I am an export service provider who receives remittance in foreign currency on services provided to customers aboard(out of India).

Explaining the nature of business :-

1. Exporters in the SEZ and in India exports used clothing and other products respectively to the customers out of India.

2. Customers out of India are not sure if the quality, grade they would get is good or packing of the product would be upto the standards they want.

THAT is where I come in and my company helps/service the customers out india

My export services to the customers out of India are as follows :-

1. Check Quality control of the product for customer out of India being exported by the goods exporter In SEZ or outside.

2. Check Packing of the product being exported by the goods exporter as per the instruction of the customer out of India.

For these export services :-

a) I/Service company raises an Invoice for the services given to customer out of India.

b) I/Service company receives the remittance as per the invoice raised.

My specific questions regarding my work :-

1.Do these services count as export of services ?? or just an agent service ??

2.Do I/Company have to pay GST ?? or I am not liable for it as my/company export services are purely for customers out of India only.

3. Is my service a zero rated supply ?? As I am exporting my services to customers out of India.

4.Can I get a refund on my GST for this service or not ?

5. Can I apply for Letter of undertaking for my services without the payment of integrated tax.

Thank you


I disagree with the opinion that Intermediary who does not supply goods or services only facilitate supply of goods and services shall fall under Section 24(vii)


Hi Janvi,
You fall in the definition of an ‘intermediary’. Accordingly, the place of supply shall be the location of supplier i.e. you in India. Hence it will be liable for GST and charge CGST and SGST as location of supplier and place of supply are in the same state.


I have one query. We facilitate on our end user in Oman for procuring the goods. And supplier generally based out of India. We receive money in Dollars. Below is my queries:
1. Is this commission transaction come under service export?
2. Do i need to pay GST on this transaction/
3. Do we eligible for 0.1%?