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reba sen   24 June 2017

Gst on sub broker & authorised person of a stock broker

 
Please advise and assist in understanding the effect of GST on Existing Sub – Brokers / Authorised Persons of stock broking houses and stock brokers.

Under the old ambit of Service Tax, Sub – Brokers / Authorised Persons of stock brokers, were not liable to charge any service tax to customers as services of Sub – Brokers / Authorised Persons were exempted.

Attached is list of exempted services under the Service Tax regim. Please refer to Page 9 of attachment “exemptions” serial no 29. 

https://www.cbec.gov.in/resources//htdocs-servicetax/mega-exemption-notfn.pdf

 

However under the GST regim, the clause of Sub  Brokers / Authorised Person is not mentioned anywhere.

https://www.cbec.gov.in/resources//htdocs-cbec/gst/Schedule%20of%20GST%20rates%20for%20services.pdf

Please help in seeking clarification as sub brokers and authorised person only provide service. SUB BROKERS DO NOT CHARGE ANY SERVICE TAX OR GST ON THE CONTRACT NOTE. THE END CUSTOMER PAYS THE NET CONTRACT NOTE VALUE WHICH IS INCLUSIVE OF SERVICE TAX TO THE BROKER DIRECTLY. THE CONTRACT NOTE IS ISSUED DIRECTLY BY THE BROKER.

HOW CAN A SUB BROKER PAY GST FROM HIS POCKET @ 18 % WHEN WE IS NOT COLLECTING AND GST FROM THE CUSTOMER?

PLEASE ADVISE.

Anyother Sub-Broker or Authorised Person having the same query or a resolution to the query please revert at the email ( amit.khanna8@yahoo.com or ping on +91 9831074224 )



 13 Replies

CMGandhi   01 July 2017

cmg_tax@yahoo.co.in

CMGandhi   01 July 2017

Please help in seeking clarification as sub brokers and authorised person only provide service. SUB BROKERS DO NOT CHARGE ANY SERVICE TAX OR GST ON THE CONTRACT NOTE. THE END CUSTOMER PAYS THE NET CONTRACT NOTE VALUE WHICH IS INCLUSIVE OF SERVICE TAX TO THE BROKER DIRECTLY. THE CONTRACT NOTE IS ISSUED DIRECTLY BY THE BROKER. HOW CAN A SUB BROKER PAY GST FROM HIS POCKET @ 18 % WHEN WE IS NOT COLLECTING AND GST FROM THE CUSTOMER? PLEASE ADVISE on my email ID cmg_tax@yahoo.co.in

Namit Jain   03 July 2017

According to my broker, AP and sub broker will also apply for GST. broker will pay incentive+18%GST. And sub broker will pay GST to department

reba sen   04 July 2017

 

Summary for GST Applicability to Sub Brokers & Authorised Persons: (as on 04-07-2017)

Hi Friends and All Concerned,

Hope you find the below helpful. The points below have been made in consultation with Brokers, Stock brokers, Chartered Accountants, Lawyers, Tax Consultants and Other learned people.

Please note the GST rules and awareness is/are, changing/updated practically every day. In-case you feel that certain facts are wrong or not correct, please feel free to ping at the numbers mentioned  below. ** Please consult with your Chartered Accountants, Lawyers, Main brokers **

  • GST registration is not mandatory for every Sub Brokers & Authorised Persons.
  • Sub Brokers & Authorised Persons need to register for GST only if their annual turnover is above 20 lakhs (or 10 lakhs as in some states)
  • Annual Turnover of Rs 20 Lakhs means , the commission that you receive from your broker. YOUR NETT FINAL PAYOUT. (Eg. If in a particular month you make a total brokerage of Rs 1,00,000/- and your sharing with your main broker is 50 : 50, then you will get commission of Rs 50,000/- This 50,000/- is your turnover.
  • If someone does other business eg. MF, Insurance, Other financial products, or any other products under the same name and the total commission for all the products is more than Rs 20,00,000/- then YOU WILL HAVE TO REGISTER FOR GST.
  • If you register for GST, you will have to make a invoice in the name of your broker at the end of every month and charge GST. . (Eg. If in a particular month you make a total brokerage of Rs 1,00,000/- and your sharing with your main broker is 50 : 50, then you will get commission of Rs 50,000/-

You will raise your broker the following bill. (as per govt. format)

Bill / Invoice To Main Broker:

 

Total Payout earned or commision

 50,000.00

 

 

Add CGST @ 9 %

    4,500.00

Add SGST @ 9 %

    4,500.00

 

 

BROKER WILL PAY YOU ---->

 59,000.00

 

 

This 9000/- you will have to deposit to the government account

 

if you have any input credit you can adjust the same

 

 

Please note that there will be no change in dealing with your customers. There is no charging the customers.

Hope this is helpful. Please ping on < amit.khanna8@yahoo.com > or +91 9831074224  if you have any additional information or update.

Regards’

 

reba sen   04 July 2017

Summary for GST Applicability to Sub Brokers & Authorised Persons: (as on 04-07-2017)

Hi Friends and All Concerned,

Hope you find the below helpful. The points below have been made in consultation with Brokers, Stock brokers, Chartered Accountants, Lawyers, Tax Consultants and Other learned people.

Please note the GST rules and awareness is/are, changing/updated practically every day. In-case you feel that certain facts are wrong or not correct, please feel free to ping at the numbers mentioned  below. ** Please consult with your Chartered Accountants, Lawyers, Main brokers **

  • GST registration is not mandatory for every Sub Brokers & Authorised Persons.
  • Sub Brokers & Authorised Persons need to register for GST only if their annual turnover is above 20 lakhs (or 10 lakhs as in some states)
  • Annual Turnover of Rs 20 Lakhs means , the commission that you receive from your broker. YOUR NETT FINAL PAYOUT. (Eg. If in a particular month you make a total brokerage of Rs 1,00,000/- and your sharing with your main broker is 50 : 50, then you will get commission of Rs 50,000/- This 50,000/- is your turnover.
  • If someone does other business eg. MF, Insurance, Other financial products, or any other products under the same name and the total commission for all the products is more than Rs 20,00,000/- then YOU WILL HAVE TO REGISTER FOR GST.
  • If you register for GST, you will have to make a invoice in the name of your broker at the end of every month and charge GST. . (Eg. If in a particular month you make a total brokerage of Rs 1,00,000/- and your sharing with your main broker is 50 : 50, then you will get commission of Rs 50,000/-

You will raise your broker the following bill. (as per govt. format)

Bill / Invoice To Main Broker:

 

Total Payout earned or commision

 50,000.00

 

 

Add CGST @ 9 %

    4,500.00

Add SGST @ 9 %

    4,500.00

 

 

BROKER WILL PAY YOU ---->

 59,000.00

 

 

This 9000/- you will have to deposit to the government account

 

if you have any input credit you can adjust the same

 

 

Please note that there will be no change in dealing with your customers. There is no charging the customers.

Hope this is helpful. Please ping on < amit.khanna8@yahoo.com > or +91 9831074224  if you have any additional information or update.

Regards’

 

Pratheep   07 September 2017

I am a sub broker in Indian stock market. My broker has already charged July month GST from my clients and passed the same to me along with my incentive.

I got my business registered under GST on Aug 25th 2017. Is there any problem in paying July month invoice (because my GST registration completed in Aug month)?

WARRIOR 4 RIGHT (Consultant)     13 August 2018

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Mahendra   18 October 2019

Sec. 24. Compulsory registration in certain cases

(1) Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act, ––

(vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise;

Would sub-broker fall in this category? 

As per Stock Brokers and Sub Brokers Regulation, 1992 issued by SEBI, a “sub broker” means “any person, not being a member of stock exchange, who acts on behalf of a stockbroker as an agent or otherwise for assisting the investors in buying, selling or dealing in securities through such stockbrokers”. However, even the sub-broker should be duly registered under Section 24(vii) of the GST Act 2017. The act clearly mentions that any individual or organization acting as such an intermediary requires compulsory registration and compliance under GST. All the top broking firms are registered and adhere to this practice.

 

Mahendra   18 October 2019

Sec. 24. Compulsory registration in certain cases

(1) Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act, ––

(vii) persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise;

Would sub-broker fall in this category? 

As per Stock Brokers and Sub Brokers Regulation, 1992 issued by SEBI, a “sub broker” means “any person, not being a member of stock exchange, who acts on behalf of a stockbroker as an agent or otherwise for assisting the investors in buying, selling or dealing in securities through such stockbrokers”. However, even the sub-broker should be duly registered under Section 24(vii) of the GST Act 2017. The act clearly mentions that any individual or organization acting as such an intermediary requires compulsory registration and compliance under GST. All the top broking firms are registered and adhere to this practice.

 

Kathy Bowing   19 May 2021

Find a local lawyer and submitting all records and seeking advice 

1 Like

Misty Coruscate   21 May 2021

Find a local lawyer and submitting all records and seeking advice  

Anshul Saxena   11 March 2022

Under GST rules, tax is applied to the brokerage earned. However, the agent is not required to pay any GST on any amount recovered for delays if they meet pure agent status.

 

Apply LIC IPO

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