Top Stories Commissioning Agent/Broker dealing in brokerage of Agricultural Produce liable to be Registered under GST: AAR [Read Order] GST registration applies to all commission and brokerage income irrespective of the turnover limits of the taxpayer By Manu Sharma – On April 4, 2024 6:11 pm – 2 mins read The Andhra Pradesh Authority for Advance Ruling has ruled that commissioning agents/brokers dealing in the brokerage of agricultural products are liable to be registered under Goods and Services Tax ( GST ).

The applicant, M/s Gayatri Enterprises is a Commissioning Agent/Broker dealing in brokerage of Agricultural Produce, which facilitates transactions between wholesalers and millers/farmers. For doing this, it charges a fixed price per bag of brokerage from the parties. Its name will not be mentioned anywhere in the sale or purchase invoice of the transactions.

The applicant raises invoice to the parties only for brokerage amount either on monthly/quarterly/half yearly/annually basis. We are dealing in the brokerage of Agricultural products like Urad, UradDhall, UradGhota, Urad Husk, Moong, MoongDall, Moong Husk, Toor, Jawar and Karamani. These are the only items we are dealing with as of now. It is most pertinent to note that these products require processing/milling/dehusking to bring them into a marketable form. The applicant asked that — “As we are dealing with the brokerage of agricultural produce (which require processing), we have obtained GST Registration and we are charging GST at the rate of 18%. Please let us know, is our interpretation correct?”

The authority bench observed that, “Commission earned in such a scenario is taxable under GST as a service at 18%. GST registration applies to all commission and brokerage income irrespective of the turnover limits of the taxpayer.” It was noted that, “In view of the above it is clarified that processed pulses fall outside thc definition of agricultural produce given in notification No. 11/2017-CT(Rate) and 12/2017-CT (Rate) and corresponding notifications issued under IGST and SGST Acts and therefore the exemption from GST is not available to them. The applicant has submitted that they are processing ( dehusking/milling ) the products to make them marketable. On examination of the documents and bills submitted by the applicant along with the application the taxpayer is collecting GST on the brokerage charges.

Persons who make taxable supplies of goods or services or both on behalf of other taxable persons whether as an agent or not are required to take registration regardless of turnover. It was also noted that, “in the instant case the applicant is involved in the processing of the products and also facilitates the transactions between buyer and seller and collects brokerage charges.” Therefore the applicant is required to obtain registration as well has to pay CGST @9% and SGST @9% as per notification 11/2017-Central Tax (Rate) dated 28.06.2017 given below, irrespective of whether the goods involved in the transaction are exempted or taxable under GST. Thus, the Question “Since we are dealing In brokerage of agricultural produce which is exempt, are we liable for GST Registration?” was answered “Yes” by the authority.