Published on Friday, July 7, 2017 by
If you are a sub broker or authorized Person of a stock broker in India, this article explains your GST liability. Thousands of Zerodha AP's, Sharekhan sub brokers and Geojit, Motilal, Karvy, Edelweiss, India bulls, Anand Rathi Sub brokers now comes under GST. Both discount brokers and full-service brokers are affected by new rule.
Goods and Services Tax ('GST') got effect from July 1, 2017 in India. GST is a fundamental change in the framework of indirect taxes and impacts not only the rates of tax but also various business processes and associated documentation
Before July 1, 2017, under the service tax law sub brokers / authorized person (AP) were not liable to pay service tax as liability of sub broker was discharged by the main broker. The sub-brokers or authorized persons were not liable to get registered for service tax.
This has changed after GST is implemented. Now under GST, agents/ sub brokers are liable to get themselves registered due to provision of compulsory registration as defined in The Central Goods and Services Tax Act, 2017.
Here are few key points:
In lay man language broker is an intermediary or negotiator in the contracting of any type of bargain, acting as an agent for parties who wish to buy or sell stocks, bonds, real or personal property, commodities, or services. A distinguishing feature between an agent and a broker is that a broker acts as a middleperson. When a broker arranges a sale, he or she is an agent of both parties. The GST Act clubs all intermediaries as 'agents' who carries on the business of supply or receipt of goods and/or services on behalf of another and clubs these entities together with commission agents, brokers, etc.
Thus it is safe is assume that:
You will raise to your broker the following bill:
The sub broker or authorized person has to pay this ₹18,000 GST to the government account before the 5th of the next month.
Furthermore, if you are thinking not to get registered also the main brokers are still liable to pay GST on reverse charge for commission paid to sub broker/ franchisee. Hence it is advisable to get registered unless any specific notification or clarity not issued regarding non applicability of GST on Sub broker/ Agents etc.
Note that the above views and the opinion expressed or implied are on the knowledge of the author and the individual or company is advised to take due care and judgment before taking informed decision.
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