Goods and Services Tax (GST) has transformed the way businesses in India handle indirect taxes. While GST on goods is relatively straightforward, GST on commission income often creates confusion for agents, brokers, consultants, and service providers.
If you earn commission from insurance, real estate, stockbroking, digital platforms, referral programs, or business facilitation, this guide will help you understand everything clearly – from registration and tax rates to invoicing, compliance, and practical examples.
Let’s break it down in simple language.
What is Commission Income Under GST?
Commission income refers to the payment received for facilitating or arranging a transaction between two parties. It is a form of service income, not goods.
Examples of commission income:
- Insurance agent commission
- Real estate brokerage
- Stock market brokerage
- Travel agent commission
- Affiliate marketing income
- Business referral fees
- Sales agent commission
- Digital marketplace commissions
Under GST law, commission is classified as a supply of services.
Is GST Applicable on Commission Income?
Yes, GST is applicable on commission income in almost all cases.
As per GST law:
Any service provided for consideration in the course or furtherance of business is taxable.
Since commission is a payment for services, it becomes taxable under GST.
So, if you earn commission:
- You are supplying a service
- GST is chargeable
- You may need GST registration
- You must issue a tax invoice
- You must file GST returns
GST Rate on Commission Income
The standard GST rate on commission income is:
18% GST (9% CGST + 9% SGST) for intra-state
18% IGST for inter-state
This rate applies to:
- Agents
- Brokers
- Intermediaries
- Consultants
- Facilitators
There are very few exceptions where lower or exempt rates apply, and those are industry-specific.
HSN / SAC Code for Commission Income
Commission income falls under SAC (Service Accounting Code), not HSN.
Common SAC codes used:
- 9961 – Services in wholesale trade
- 9962 – Retail trade services
- 9971 – Financial services (insurance agents, brokers)
- 9983 – Other professional and technical services
Your exact code depends on your business nature, but GST rate generally remains 18%.
Who Needs to Pay GST on Commission Income?
You need to pay GST if:
- You are earning commission income AND
- Your annual turnover exceeds ₹20 lakhs (₹10 lakhs for special category states)
However, registration becomes compulsory in some cases even if turnover is low:
- Inter-state supply of services
- Online platform commission (e-commerce operators)
- Agents supplying on behalf of others
- Reverse charge cases (specific industries)
GST Registration for Commission Agents
You must register under GST if:
- Your turnover crosses the threshold
- You provide inter-state services
- You work with GST-registered companies that require your GSTIN
- You receive commission from e-commerce platforms
Documents required:
- PAN card
- Aadhaar
- Bank details
- Address proof
- Photograph
After registration, you will receive:
- GSTIN (GST Identification Number)
- Access to GST portal
- Authority to collect GST
How to Calculate GST on Commission Income
Let’s understand with a simple example.
Example 1 – Intra-State Commission
Commission earned: ₹50,000
GST @18% = ₹9,000
- CGST @9% = ₹4,500
- SGST @9% = ₹4,500
Total invoice value = ₹59,000
Example 2 – Inter-State Commission
Commission earned: ₹50,000
IGST @18% = ₹9,000
Total invoice value = ₹59,000
GST Invoice Format for Commission Income
Your invoice must include:
- Invoice number and date
- Your business name and GSTIN
- Client name and GSTIN
- SAC code
- Description (Commission for services)
- Taxable value
- GST rate and amount
- Place of supply
- Signature
Sample description:
Commission income for sales facilitation services for the month of January 2026
Input Tax Credit (ITC) on Commission Income
One of the biggest benefits of GST is Input Tax Credit (ITC).
You can claim ITC on:
- Office rent
- Internet bills
- Mobile bills
- Laptop and software
- Marketing expenses
- Professional fees
- Office supplies
Conditions:
- Supplier must be GST registered
- Invoice must be valid
- Payment must be made
- Supplier must file returns
This reduces your final GST liability significantly.
GST on Commission Under Reverse Charge Mechanism (RCM)
In some cases, GST is paid by the recipient instead of the commission agent.
Common RCM examples:
- Services provided to banks or NBFCs by recovery agents
- Insurance agents (in specific arrangements)
- Certain government-notified services
Under RCM:
- Agent does not charge GST
- Recipient pays GST directly to government
- Agent mentions “GST payable under reverse charge” on invoice
Always verify your contract and industry rules.
GST on Insurance Commission Income
Insurance agents frequently ask this.
Key points:
- Insurance commission is taxable
- GST rate = 18%
- In many cases, companies pay GST under RCM
- If RCM applies, agent does not charge GST
- If not RCM, agent charges GST normally
Always confirm with the insurance company.
GST on Real Estate Commission Income
Real estate brokers must charge GST:
- Commission = taxable service
- GST rate = 18%
- Applicable even if property sale itself is exempt
- Registration required if turnover exceeds limit
GST on Stock Broker Commission
Stockbrokers:
- Charge GST on brokerage
- Rate = 18%
- Shown separately in contract notes
- Paid by clients
GST on Online Platform and Affiliate Commission
If you earn from:
- Amazon
- Flipkart
- Meesho
- YouTube
- Blogging
- Affiliate programs
Then:
- Your income is commission-based service
- GST @18% applicable
- GST registration required in most cases
- Platforms may deduct TCS also
GST Returns for Commission Income
You must file:
- GSTR-1 – Outward supplies
- GSTR-3B – Summary return
Monthly or quarterly based on scheme.
Late filing leads to:
- Late fee
- Interest
- Blocking of ITC
- Legal notices
Accounting Treatment of Commission Income with GST
In books:
- Commission income recorded as revenue
- GST collected recorded as liability
- ITC recorded as asset
- Net GST paid to government
Example:
Commission: ₹50,000
GST collected: ₹9,000
Journal entry:
- Debtor A/c – Dr ₹59,000
- Commission Income – Cr ₹50,000
- GST Payable – Cr ₹9,000
Common Mistakes to Avoid
- Not registering under GST
- Charging wrong GST rate
- Forgetting to file returns
- Not claiming ITC
- Wrong place of supply
- Ignoring RCM provisions
- Issuing invalid invoices
These mistakes can lead to penalties and audits.
GST Compliance Checklist for Commission Earners
- GST registration completed
- Correct SAC code used
- 18% GST charged
- Proper invoices issued
- ITC claimed
- Monthly/quarterly returns filed
- Tax paid on time
- Records maintained for 6 years
Advantages of GST Compliance for Commission Agents
- Legal business operations
- Better credibility with companies
- Eligible for ITC
- Easy bank loans
- Corporate contracts
- Avoid penalties
- Smooth audits
Frequently Asked Questions (FAQs)
Is GST applicable on small commission income?
Yes, but registration is required only if turnover exceeds the threshold or other conditions apply.
Can individuals charge GST on commission?
Yes, if registered under GST.
Is commission income treated as professional income?
Under income tax – yes.
Under GST – it is a service.
Can I claim ITC on mobile and internet bills?
Yes, if used for business and invoice is in your business name.
What happens if I don’t pay GST?
You may face:
- Penalties
- Interest
- Notices
- Account blocking
- Legal proceedings
Future Outlook of GST on Commission Income
With increasing digital platforms and gig economy growth:
- Commission-based income is rising
- GST tracking is becoming stricter
- Data matching through PAN & GSTIN
- AI-based scrutiny by tax department
Staying compliant is not optional anymore.
Conclusion
GST on commission income is a crucial topic for anyone earning through brokerage, agency, referral, or facilitation services. Since commission is treated as a taxable service, 18% GST applies in most cases.
Whether you are an insurance agent, real estate broker, freelancer, affiliate marketer, or business consultant, understanding GST rules helps you:
- Stay compliant
- Avoid penalties
- Save tax through ITC
- Build credibility
- Grow professionally
If you handle your GST properly from the beginning, commission income can become a smooth, profitable, and legally safe revenue stream.