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Case Study On Intermediary Service Under GST

An Individual says Mr. B resident of Delhi (India) providing the services to a German client for selling his products in East Asian Countries (Outside India). He charged from his foreign client @ 5 % on the amount of sell made through him.

The query of Mr. B:

  • Whether he is liable to register under GST in India?
  • What is the nature of service he supplied and what is the tax liability applicable to him?
  • Whether he is eligible to take benefit of export services without payment of tax?


  • As per Section 22 of the CGST Act, every supplier shall be liable to register under this Act in the state, from where he makes a taxable supply of services if his aggregate turnover in a financial year exceeds Rs. 20 lacs.
  • As per Section 2(108) of the CGST Act, Taxable supply means a supply of goods or services or both which is leviable to tax under this Act.
  • As per Section 7(1) of CGST Act, supply includes all forms of supply of goods or services or both such as transfer, barter, exchange, license, rental, lease, or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business.
  • According to Section 2(102) of CGST Act, “services” means anything other than goods, money, and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged. 
  • Based on the above provisions, we can say that he is liable to be registered in Delhi (India) under GST if his aggregate turnover exceeds Rs. 20 lacs. 
  • As per section 2(13) of the IGST Act, an intermediary refers to a broker, an agent or any other person who arranges or facilitates the supply of goods or securities or services between two or more persons. The definition excludes a person who supplies such goods or services or both or securities on his own account. Therefore services provided by Mr. B are intermediary services.
  • As per Section 7(1) of IGST Act, Inter-State supply means where the location of the supplier of service and place of supply are in –
  • Two different states;
  • Two different Union territories; or
  • A state and a UT shall be treated as a supply of goods in the course of inter-state trade or commerce.

8. As per Section 8(1) of IGST Act, Intra State supply means where the location of the supplier of service and place of supply are in –

  • same state;
  • The same union territory shall be treated as an intra-state supply.

 9. As per Section 13(8) (b) of the IGST Act, in the case of intermediary services, the place of supply shall be the location of the supplier of services. Therefore, in this case, the location of the supplier and place of supply both are in Delhi. Hence it is an Intrastate supply, so accordingly CGST and SGST would be payable.

10. In this case, Mr. B is providing services outside India to a German client, hence it is a case of export of services but question is that whether it is export of services under GST or not for this we have to understand the definition of Export of service under GST.

According to Section 2(6) of IGST Act, “Export of services” means the supply of any service when all of the below conditions are fulfilled:

  • the supplier of service is located in India;
  • the recipient of service is located outside India;
  • the place of supply of service is outside India;
  • the payment for such service has been received by the supplier of service in convertible foreign exchange;
  • the supplier of service and the recipient of service are not merely establishments of a distinct person

In this Case place of supply of service provided by Mr. B is in India (as per point no. 8), it is not an export of service as per GST Act because all of the above conditions are not satisfied as given in Section 2(6) of IGST Act.

To Conclude:

  • Yes, he is liable to register under GST in India based on point 1-5 as above.
  • He is providing intermediary service and liable to pay CGST and SGST based on point 6-9 as above.
  • He can’t take the benefit of the export of service based on point 10 as above.

(Disclaimer: This content is meant for our clients or professional friends only for stimulating discussion on the subject matter not to frame any commercial opinion. All efforts are made to compile correctly with no guarantee of extreme accuracy)

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