Money Transfer Business in India
Money Transfer agent engage in money Transfer business do the money transfer in banks or Wallets like (Paytm, Phonepe, Mobikwik, Gpay against a small amount of fee or commission of 0.5% to 2%. Lets read through this article about the implications of GST and Income Tax on Money transfer commission agents transferring fund in domestic area of India.
Money transfer is a very easy procedure but has high tax implications. The person who wishes to send money must first deposit the funds with agent. The agent would then send the money to the sender via NEFT or IMPS or RTGS or UPI. It follows a very simple and straightforward procedure. Why people go for this service, the answer is because of the advantages of this –
- There will be no more waiting in line to send money.
- Simple to use
- You can get the money transferred even if you don’t have a bank account.
- Secure and Safe
- There is no need to carry cash.
- Within 24 hours, money is transferred to the intended recipient.
Income Tax provision on money transfer Business
Only the commission or the fee charged against the fund transfer will be the income. For example, A transfers Rs 1 lakh to B and charged Rs 500 as commission. In this case, only Rs 500 will be considered income of A not the Rs 1,00,500.
Tax Audit for Money Transfer Business
If the total commission income does not exceed Rs 1 crore, no tax audit is required by the Money transfer business. However, there are various trade practices prevalent in the country in regard to fund transfer business and no uniform pattern is followed by the commission agents. Terms and Conditions of transaction may warrant Tax Audit. Each transaction, therefore, requires to be examined with reference to its terms and conditions and no hard and fast rule can be laid down as to whether the agent is acting only as an agent or also as a principal.
GST provision on money transfer business
A Commission Agent is required to obtain Compulsory Registration u/s 24(7) of CGST Act, irrespective of its turnover. Thus, the threshold limit of Rs.20 lakh does not apply to an Agent.
Money transfer Fund transferred are not liable for GST. However, the commission charged is liable for 18% GST.
There is no specific provision for money transfer business under GST, it will covered under other services auxiliary to financial services, SAC 997159.
Final Word
We hope this article helped you to know about “Income Tax and Gst provision on Money Transfer Business in India”. Should you wish to know more about Money Transfer or any tax-related matters, feel free to contact us and we will be glad to assist you.
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