GST on commission for overseas student recruitment services
The Authority for Advance Ruling decided that commission-based student recruitment for foreign universities is a taxable service in India, not an export.
- Ruling
- 02 /WBAAR/ 2017-18
- Dated
- 21 Mar 2018
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Global Reach Education Services asked if their recruitment service was an export.
- The authority ruled the company acts as an intermediary.
- The place of supply is India, making the service taxable.
- The service does not qualify as a zero-rated export.
In short
The company asked if promoting foreign university courses to Indian students and receiving a commission counts as an export of service under the Goods and Services Tax (GST) law. If it were an export, it would be zero-rated, meaning no GST would apply. The authority looked at whether the company was an independent service provider or an intermediary connecting students to universities.
What has changed
How it worked before
Many businesses assumed that providing services to foreign clients for payment in foreign currency automatically qualified as an export of service.
What has changed
The authority decided that because the company facilitates the recruitment process for a commission, they are an intermediary. Under the Integrated Goods and Services Tax (IGST) Act, the place of supply for an intermediary is where the supplier is located, which is India. This means the service is taxable in India rather than being treated as a tax-free export.
Who this affects
Education consultants, student recruitment agencies, and commission-based agents working for foreign institutions.
An example
Imagine a firm called 'StudyAbroad Connect' that recruits students for a university in the UK. They receive a commission for every student who enrolls. Based on this ruling, StudyAbroad Connect would likely be classified as an intermediary. Consequently, they must charge GST on their commission income because the place of supply is considered to be in India.
What you should do
If you provide similar services, review your contracts to see if you are acting as an intermediary. Remember that an advance ruling only binds the company that asked and its specific tax officer; it is not a law that applies to your business automatically. Consult with your tax advisor to assess your specific risk.
If you do nothing
If you treat your services as an export and do not pay GST, you risk a tax demand for unpaid taxes, interest, and penalties. A tax officer may disagree with your classification during an audit. Being wrong can lead to significant financial liabilities that could have been avoided with proper planning.
The terms explained
- Intermediary
- A person or business that arranges or facilitates the supply of goods or services between two other parties, usually for a commission.
- Export of service
- A service provided from India to a recipient located outside India where the place of supply is also outside India, often qualifying for zero-rated tax status.
- Zero-rated supply
- A supply of goods or services that is taxed at a rate of zero percent, allowing the business to claim back any taxes paid on their own inputs.
- Place of supply
- The location where a transaction is deemed to have taken place for tax purposes, which determines whether the service is taxable in India.
The ruling in detail
Authority for Advance Ruling
Global Reach Education Services Pvt Ltd
02 /WBAAR/ 2017-18 · West Bengal
Questions before the authority
- Whether the service provided to the Universities abroad is to be considered export within the meaning of Section 2(6) of the Integrated Goods and Services Act, 2017, and, therefore, a zero-rated supply under the CGST / WBGST Act 2017.
Facts
The applicant provides overseas education advisory services, promoting foreign university courses to prospective students in India. They receive a commission from the foreign universities based on the number of students successfully recruited and enrolled. The applicant claims this is an independent service, while the authority examines whether they are acting as an intermediary.
Ruling
| Question | What the authority ruled |
|---|---|
| Whether the service is an export of service | No, the services are not Export of Service and are taxable under the GST Act. The ruling is subject to the provisions under Section 103(2) of the GST Act. |
The authority ruled that the applicant's services do not qualify as an export of service. Consequently, the services are considered taxable under the GST Act. The authority determined that the applicant acts as an intermediary, making the place of supply the territory of India.
Reasoning
The authority concluded that the applicant is an **intermediary** because they facilitate the recruitment of students for foreign universities and receive a commission based on that recruitment. Because they are an intermediary, the place of supply is determined under Section 13(8)(b) of the IGST Act as the location of the supplier, which is India. Since the place of supply is not outside India, the condition under Section 2(6)(iii) of the IGST Act for an export of service is not satisfied. The authority relied on the definitions and provisions within the IGST Act, specifically Sections 2(6), 2(13), 8, and 13.
Provisions relied on
- Section 2(6) of the IGST Act
- Section 2(13) of the IGST Act
- Section 8 of the IGST Act
- Section 13(2) of the IGST Act
- Section 13(8)(b) of the IGST Act
- Section 97(2)(a) & (e) of the GST Act
- Section 103(2) of the GST Act
- Section 104(1) of the GST Act
For the practitioner
This ruling clarifies that education agents receiving commission-based compensation for student recruitment are likely to be classified as **intermediaries** under the IGST Act. Practitioners should note that such arrangements will generally fail the **export of service** criteria because the place of supply will be deemed to be in India. It serves as a warning that contractual clauses claiming an 'independent contractor' status may be overridden by the actual nature of the services provided.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/wb_2017-18_02_dated_21032018.pdf
Legibility of the scan, as read: high.
Prepared 15-10-2026.
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