Key Highlights of Circular No. 159/15/2021-GST

02March

Key Highlights of Circular No. 159/15/2021-GST

<h2>1. Definition of "Intermediary" under GST</h2>? As per Section 2(13) of IGST Act, 2017, an intermediary is:<ul><li>A broker, agent, or any other person who arranges or facilitates the supply of goods, services, or securities between two or more parties.</li><li>Does NOT include a person who supplies goods or services on their own account.</li></ul>? Intermediary Concept in Service Tax & GST:<ul><li>The GST definition is largely similar to the Service Tax definition, except that it now includes securities.</li></ul><hr><h2>2. Essential Conditions to Qualify as an "Intermediary"</h2>✅ Three or More Parties Involved<ul><li>An intermediary must arrange or facilitate a transaction between two separate parties.</li><li>A two-party transaction does not qualify as an intermediary service.</li></ul>✅ Two Distinct Supplies<ul><li>Main Supply: Between two principal parties (can be goods, services, or securities).</li><li>Ancillary Supply: The intermediary facilitates or arranges the main supply.</li></ul>✅ Acts as an Agent or Facilitator<ul><li>The intermediary does not provide the main supply themselves but only plays a supportive role.</li></ul>✅ Does Not Supply Goods/Services on Own Account<ul><li>If a person partially or fully provides the main service themselves, they are not an intermediary.</li></ul>✅ Subcontracting is NOT Intermediation<ul><li>If a business outsources work to another provider, the subcontractor is not an intermediary since they directly supply the main service.</li></ul><hr><h2>3. Key Clarifications with Examples</h2><h3>? Example 1: Intermediary Service (✔️)</h3>? C helps A sell machinery by finding buyer B and arranging the contract. ? C does not supply the machinery but only facilitates the sale. ? C is an intermediary and provides intermediary services to A.<h3>? Example 2: Not an Intermediary (❌)</h3>? A is a software company contracted by B to develop customized software. ? A outsources part of the software development to C. ? C directly provides the service to A and does not arrange the main supply between A & B. ? C is NOT an intermediary, as they are directly supplying services.<h3>? Example 3: Intermediary Service (✔️)</h3>? P (foreign insurance company) hires Q (Indian service provider) to find an Indian company R to process insurance claims. ? Q does not process the claims but only arranges the deal between P & R. ? Q is an intermediary.<h3>? Example 4: Not an Intermediary (❌)</h3>? A (foreign computer manufacturer) hires B (Indian BPO) to provide customer support. ? B directly interacts with A’s customers and provides customer care services. ? B is NOT an intermediary, as they are directly supplying services to A.<hr><h2>4. Place of Supply Rules for Intermediaries</h2>? Place of Supply for Intermediary Services (Section 13 of IGST Act) applies only when either the supplier or recipient is located outside India.<hr><h2>5. Key Takeaways for Businesses</h2>✅ Ensure that a transaction involves at least three parties to be considered an intermediary service. ✅ If you directly supply the goods/services, you are NOT an intermediary. ✅ Subcontractors are not intermediaries if they deliver the main service. ✅ Intermediary services follow specific place-of-supply rules under GST.<hr><h2>6. Trade Notices & Implementation</h2>? CBIC directs tax authorities to issue trade notices to ensure businesses understand these clarifications. ? Any challenges in implementation should be reported to CBIC.<a href="https://cms.plasament.com/storage/shubham-pathak/circular-no-159-14-2021-gst.pdf">Circular-No-159-14-2021-GST</a>

Key Highlights of Circular No. 159/15/2021-GST

Categories:

Share:

Related Post