GST Clarification on Intermediaries

Episode Duration:
65 minutes

Episode Background:
One of the interminable conundrums of the GST regime pertains to taxation of ‘Intermediaries’ which as a concept is not novel since it has roots from the pre-GST era. GST law defines ‘Intermediary’ as 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.

A detailed Circular dated 20 September 2021, was issued this week by FinMin clarifying the scope of Intermediary services in pursuance of the  45th GST Council meeting. To recapitulate, it has been clarified that there must be involvement of three parties and two distinct supplies. More importantly, it is being clarified that supply under a sub-contract/outsourcing arrangement will not qualify as an ‘intermediary service’. While undisputedly, the Circular seeks to address the long-standing litigation and provide a much-needed breather to BPM/IT sector, however, the precise dispute pertaining to ‘place of supply which has been bothering the sector still remains unaddressed.

What shall the episode cover?
Against this backdrop, Taxsutra is delighted to bring to you a special episode with none other than Advocate Rohan Shah titled, “GST Clarification on Intermediaries – The Nuances and The Knots”.

Key Highlights

In this episode, Mr. Shah has comprehensively,

1. Dissect the aforesaid clarification in the light of relevant jurisprudence on the matter;
2. Discuss the background, AAR/AAAR rulings and litigations pending before HCs pertaining to taxability of Intermediaries;
3. Examine finer and unresolved issues/grey areas and need for re-look of certain provisions;
4. Share his take on where India stands in relation to international best practices vis-à-vis taxation of Intermediary services; and
5. Suggest Way Forward.