Ebay Commission Charges
For each fulfilled order Ebay charges commission from sellers. Now question arises whether GST under RCM is payable on such a commission as Import of service ?
As per Section 2(11) of IGST Act, Import of service means supply of service where: –
- Supplier of service is located outside India
- Recipient of service is located in India
- Place of supply of service is in India
Now, we need to find out whether all the above conditions gets fulfilled for the commission charges paid to Ebay to consider it as import of services?
Supplier of service is located outside India
Ebay is the supplier of services (as you are paying commission to Ebay) who is located outside India.
Recipient of service is located in India
Ebay Seller (You) is a recipient of service, who is located in India
Place of supply of service is in India
As per Section 13(2) of the IGST Act, the place of supply of services shall be the location of the recipient except in cases specified under Section 13(3) to 13(13) which cover the intermediary services mentioned in Section 13(8)b.
For this we need to check whether services provided by Ebay to GST registered sellers falls under Intermediary Services as defined in Section 2(13) of the IGST Act. As per Section 2(13) of the IGST Act, “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.
Further, GST department has released a Circular No. 159/15/2021-GST which clarifies the criteria for a service to be considered as an Intermediary Service.
Circular No. 159/15/2021-GST
To explain the scope of “intermediary”, GST department released Circular No. 159/15/2021-GST. As per this circular, the pre-requiste requirement for classification of intermediary services must have: –
- Minimum three persons
- seller (You i.e. person registered in India)
- buyer (Your customer i.e. end customer to whom the goods will be delivered)
- intermediary service provider (Ebay )
- Two distinct supplies
- Main supply (supply of goods between seller and buyer)
- Ancillary supply (facilitating or arranging the main supply between the two principals i.e. seller and buyer)
- Intermediary service provider to have the character of an agent, broker or any other similar person
- This criteria is NOT being fulfilled here because Ebay is not working as an agent or broker for the registered sellers. There is no Agent-Principal relationship between Ebay & Ebay Seller.
- Ebay is an independent third party which is an online market platform (E-commerce Operator) and provides various services to its sellers registered on its platform & charges fees in the various form like subscription fee, advertising fee, listing fee, insertion fee, shipping fee (if provided by Ebay) etc.
- Selling through E-commerce platforms is entirely a separate nature of activity which cannot be taken as similar to selling through traditional Agent-Principal Services.
Further reference can also be derived from Section 52 of the CGST Act, which mandates all E-commerce Operators, not being agents, to deduct TCS at 1% on the net taxable suppliers. That means all E-commerce Operators, who are liable to deduct TCS, can’t be agents of the seller. The nature of the service provided by Ebay is very similar to Amazon, Flipkart , Meesho etc. who are deducting TCS under Section 52 of the CGST Act.
As Ebay facilitates the supply of goods between seller and customer but not in a capacity of agent which is one of the criteria for falling under the scope of Intermediary service. Hence, in such case, the place of supply shall be the location of the Ebay seller which is India so it will come under Import of Service and GST is payable under RCM on such services provided by Ebay.
Note – Ebay is not deducting TCS under section 52 as he is a Foreign E-commerce Operator and does not have a place of business in India. However, as per the FAQ released by the GST council on 28th Sep 2018, if an Indian supplier registered on such Foreign E-commerce operator is selling goods/services to a customer in India, then such Foreign ECOM need to comply with the provision of Section 52 of the CGST Act.
