Top Stories GST leviable on Brokerage Charges by Broker of Agricultural/Exempt Produce at 18%: AAR [Read Order] Commission earned in such a scenario is taxable under Goods and Services Tax as a service at 18%. By Manu Sharma – On April 4, 2024 8:53 pm – 2 mins read The Andhra Pradesh Authority for Advance Ruling ( AAR ) has ruled that, Goods and Services Tax is leviable at 18% ( 9% Central Goods and Services Tax + 9% State Goods and Services Tax ) on brokerage charges by brokers, even when the produce is agricultural or exempt. 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. The applicant deals 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 Goods and Services Tax  Registration and we are charging Goods and Services Tax  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 Goods and Services Tax  as a service at 18%. Goods and Services Tax  registration applies to all commission and brokerage income irrespective of the turnover limits of the taxpayer.” It was also 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 Integrated Goods and Services Tax and State Goods and Services Tax Acts and therefore the exemption from Goods and Services Tax  is not available to them.” The applicant had 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 Goods and Services Tax on the brokerage charges.

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.” It was thus ruled by the authority bench that the applicant is required to obtain registration and has to pay Central Goods and Services Tax  @ 9% and State Goods and Services Tax  @ 9% as per notification 11/2017-Central Tax (Rate) dated 28.06.201, irrespective of whether the goods involved in the transaction are exempted or taxable under Goods and Services Tax.