CBIC issues clarification on doubt related to the scope of intermediary.

The Central Board of Indirect Taxes and Customs on 20th September 2021 has issued Clarification on doubts related to scope of “Intermediary. The term Intermediary has been defined under section 2(13) of the Integrated Goods and Services Tax Act, 2017 which 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.

The concept of intermediary services, as defined above, requires some basic prerequisites,which are a minimum of three parties, two distinct supplies, Intermediary service provider to have the character of an agent, broker or any other similar person and does not include a person who supplies such goods or services or both or securities on his own account.

An important exclusion from intermediary is sub-contracting. The supplier of main service may decide to outsource the supply of the main service, either fully or partly, to one or more sub-contractors. Such sub-contractor provides the main supply, either fully or a part thereof, and does not merely arrange or facilitate the main supply between the principal supplier and his customers, and therefore, clearly is not an intermediary.

The specific provision of a place of supply of ‘intermediary services’ under section 13 of the IGST Act shall be invoked only when either the location of supplier of intermediary services or location of the recipient of intermediary services is outside India.

RECENT UPDATES