The Central Board of Indirect Taxes and Customs (CBIC) has issued the circular no. 159/15/2021 – GST clarifying the doubts related to Intermediary services. In the circular it has specified that the scope of the intermediary definition in the GST is the same as that of in the service tax regime.
In the circular the concept of intermediary services has been specified:-
Minimum of three parties
There must be minimum 3 parties in the transaction to be eligible to fall within the definition of Intermediary.
Two distinct supplies
In the transaction of Intermediary services, there are 2 distinct supplies:-
Main supply – The main supply shall be transaction between the 2 main parties for the supply of goods or services.
Ancillary supply – The ancillary supply shall be the facilitating the 2 parties to enter into the main supply.
Intermediary service provider to have the character of an agent, broker or any similar person
The main characteristic of the Intermediary service is that the intermediary should have the essence of agent / broker or in any other nature in which the intermediary is facilitating the supply between 2 main parties.
Does not include a person who supplies such goods or services in his own account
In the definition of Intermediary it is mentioned that the intermediary services should not include the supply of goods or services or both in his own account.
Sub contracting is not Intermediary services
In the circular It has been explained that the intermediary services shall not include the sub contracting.
To view and download the circular, click here Circular