GST & Indirect Tax

GST on Commission Agents and Referral Income: Complete Guide for 2026

📅 June 2026GST✔ cbic-gst.gov.in

Reviewed by CA Nikhil Gupta · Last reviewed 19 June 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.

For broader context, see the GST Law & Practice Hub.

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%.

Use the Finin2min GST Services Rate Master to apply these points to your figures or facts.

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.

For the connected rule, example or next step, see GST on Sponsorship Income and Event Partnerships.

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

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Aggregate Turnover Still Counts RCM-Exempt Activity Differently: If a person has mixed income — say, ₹12L in forward-charge mutual fund distributor brokerage and ₹11L in RCM-covered insurance agency commission — the aggregate turnover for registration purposes is computed across all activities (₹23L combined), which can push them over the ₹20L threshold and require registration for the forward-charge portion, even though the RCM-covered insurance commission itself remains taxed in the insurer's hands.

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

Annual affiliate income: ₹24L

Ravi earns affiliate commissions by placing product links on his blog. Amazon India and Flipkart pay commissions ranging from 1%–8% of sale value.

Nature of supply

Pure agency — no title taken; 18% on commission only

GST registration

Mandatory (₹24L > ₹20L threshold)

GST on commission

18% on ₹24L = ₹4.32L per year

ITC available

Yes — on internet, software, hosting

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.

Commission vs referral — the agency test changes GST registration

Finin2min answer: Commission income is generally consideration for a taxable service, but compulsory registration under section 24(vii) turns on whether the person makes taxable supplies on behalf of another taxable person as an agent or otherwise. CBIC’s own sectoral FAQ distinguishes a true agent/sub-broker from a person earning referral commission only.

Decision table

Situation	2026 treatment / control	Why it matters
Acts on behalf of principal toward customer	Section 24(vii) compulsory-registration risk is strong.	Agency substance matters, not job title.
Referral commission only	May fall outside the statutory “agent” compulsory-registration trigger.	Then test ordinary turnover/other compulsory-registration rules.
Inter-State service	Notification 10/2017 can preserve threshold exemption for qualifying interstate service suppliers.	Do not rely on older FAQ saying every interstate service requires registration.
Registered supplier	Apply correct SAC/rate/place-of-supply and invoicing.	Registration answer and tax-rate answer are separate.

Worked practical example

Person A merely introduces leads and receives a referral fee; Person B negotiates/contracts on behalf of the principal and services clients. Treating both as identical “commission agents” can produce the wrong section 24 conclusion.

Evidence checklist

agency/referral agreement
scope of authority
customer-facing communications
commission invoices
turnover and place-of-supply working

Primary-source checks: CBIC CGST Act — sections 22/24 · CBIC sectoral FAQ — agent vs referral only · Notification 10/2017 Integrated Tax

Use this with the original article: this module tightens current-law, edge-case and evidence controls; it does not replace the article's existing explanation or your fact-specific professional review.

FAQ

For the connected rule, example or next step, see LLP GST and Income-Tax Reconciliation Before Filing.

Is GST applicable on insurance agent commission? +

Yes, GST applies at 18%, but the agent does not collect or pay it. Insurance agent commission is taxed under reverse charge per Notification 13/2017-CT(R) — the insurance company self-assesses and pays the GST on the commission it pays to the agent, irrespective of the commission amount. Because the agent makes only RCM-covered supplies in this capacity, an agent whose entire taxable activity is insurance agency commission is exempt from GST registration under Notification 5/2017-CT, even with high commission income. If the same person also earns other forward-charge income (e.g., as an MFD or referral partner), that other income is assessed separately for the ₹20L registration threshold.

Does a referral partner need to collect GST from the company paying referral fee? +

For an ordinary referral/affiliate arrangement (not a notified RCM category like insurance agency or bank recovery-agent services), yes — if the referral partner is GST-registered, they must charge 18% GST on the referral fee under forward charge and issue a tax invoice to the company. The company, if registered, can claim this as ITC. Below ₹20L turnover, the referral partner need not register or collect GST. This is different from insurance agents and recovery agents, whose commissions are taxed under reverse charge instead.

Do mutual fund distributors pay GST on trail commissions? +

Yes. Trail commissions received from AMCs (Asset Management Companies) are taxable at 18% GST. AMFI-registered distributors with aggregate trail income above ₹20L must register and file returns. The AMC issues commission statements which serve as the basis for tax invoices issued by the distributor to the AMC.

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Source and review trail

Use the current official instrument, portal or regulator publication before acting. This panel separates the category authority from page-specific references.

Primary category: GST & Indirect Tax
Official starting point: www.gst.gov.in

Page source links

For the connected rule, example or next step, see GST Turnover vs Income-Tax Turnover: Reconciliation for Businesses.

Primary sources & related provisions

Statutory provisions referenced in this guide:

Section 24 - CGST Act, 2017