Sub-contracting for a service is not an intermediary service: CBIC

Central Board of Indirect Taxes and Customs has issued a circular in which they have clarified doubts related to scope of “Intermediary”.

The concept of ‘intermediary’ was borrowed in GST from the Service Tax Regime. The definition of ‘intermediary’ in the Service Tax law as given in Rule 2(f) of Place of Provision of Services Rules, 2012 issued vide notification No. 28/2012-ST, dated 20-6-2012.

The concept of intermediary services, as defined above, requires some basic pre-requisites, which are discussed below:

• Minimum of Three Parties
• It usually has two distinct supplies wherein main supply is between 2 principals and their is Ancillary supply, which is the service of facilitating or arranging the main supply.
• Intermediary service provider to have the character of an agent, broker or any other similar person
• It does not include a person who supplies such goods or services or both or securities on his own account
• Sub-contracting for a service is not an intermediary service

Download the Circular given below for complete understanding.