GST on Commission Agents and Referral Income: Complete Guide for 2026
Commission agents, referral partners, affiliate marketers and brokers — whether in real estate, insurance, finance or e-commerce — earn income that attracts 18% GST. The distinction between acting as principal vs agent determines whether GST applies on the full transaction value or just the commission. This guide untangles the agency rules under GST.
GST on Agency vs Principal: The Core Distinction
Under Schedule I of the CGST Act, a supply made by an agent on behalf of a principal can be treated differently depending on the agency relationship. The key test, as clarified in Circular 57/31/2018-GST, is not simply "does the agent hold title to the goods" — it turns specifically on whether the agent issues the invoice for the supply of goods in its own name. Where the agent invoices the customer in its own name (acting, in substance, as if it were the supplier), the full transaction may be treated as a principal-to-principal-style supply between principal and agent for ITC and invoicing purposes, irrespective of whether physical custody or legal title technically passed. Where the agent merely facilitates the deal and the invoice for the underlying goods is issued directly by the principal to the customer, only the agent's commission is the taxable supply, at 18%.
| Role | GST Base | Rate |
|---|---|---|
| Pure commission agent/facilitator (invoice for goods issued by principal, not the agent) | Commission amount only | 18% |
| Del credere agent (guarantees buyer's payment) | Commission + guarantee fee | 18% |
| Consignment/C&F agent who invoices the end customer in its own name for the goods | Full value of goods supplied (treated as a supply to and by the agent for GST purposes) plus the agent's own commission/service charge | Rate of goods supplied, and 18% on the service component |
| Stockist/distributor (genuinely buys and resells, takes title) | Full supply value | Rate of goods/service supplied |
Insurance and Finance Referral Income
This is where ordinary referral/affiliate commissions diverge sharply from regulated insurance and recovery-agent commissions — they are not all taxed the same way.
| Category | GST Mechanism | Who Pays | Registration Impact for the Agent |
|---|---|---|---|
| Individual insurance agent's commission from an insurer (life, health, general) | Reverse charge (RCM) under Notification 13/2017-CT(R) — the insurer pays GST on the agent's commission, not the agent | Insurance company | If the agent makes only RCM-covered supplies to insurers, they fall within the registration exemption under Notification 5/2017-CT and need not register purely because of this income, regardless of how large the commission is |
| Recovery agent's services to a bank, financial institution or NBFC | Reverse charge (RCM) under Notification 13/2017-CT(R) | Bank/FI/NBFC | Same registration-exemption logic applies if recovery-agent RCM supplies are the agent's only taxable activity |
| Bank DSA (Direct Selling Agent) referral fee for loans/credit cards | Generally forward charge — the DSA charges and collects GST on the referral fee, unless the specific arrangement falls within a notified RCM category | DSA (forward charge), subject to registration threshold | Counts toward the ₹20L threshold like any other forward-charge service income |
| Mutual fund distributor trail/upfront commission from an AMC | Forward charge | Distributor | Counts toward the ₹20L threshold |
| Ordinary referral/affiliate marketing commission (e.g., e-commerce, SaaS referral programs) | Forward charge | Referrer/affiliate | Counts toward the ₹20L threshold |
Real Estate Brokers
Real estate agents earning brokerage on sale or rental of property pay 18% GST on brokerage income under forward charge, once registered. The broker's fee is a taxable service in its own right, separate from however the underlying property transaction itself is taxed.
Case Study: E-Commerce Affiliate Marketer
Case Study: Ravi Singh — Amazon/Flipkart Affiliate
Ravi earns affiliate commissions by placing product links on his blog. Amazon India and Flipkart pay commissions ranging from 1%–8% of sale value.
Ravi must issue tax invoices to Amazon/Flipkart (B2B) for his commission, collecting 18% GST which he files in GSTR-1 and remits via GSTR-3B after ITC offset.