This circular provides clarification on the scope of principal and agent relationship under Schedule I of the CGST Act in the context of del-credere agents (DCAs) and the valuation implications arising from their role.

It explains that a del-credere agent is a selling agent who not only facilitates supply on behalf of the principal but also guarantees payment from the buyer. Whether a DCA qualifies as an “agent” under Schedule I depends on the invoicing arrangement. Where the supplier issues the invoice directly to the buyer, even if through the DCA, the DCA does not qualify as an agent. However, where the DCA issues the invoice in his own name, he is treated as an agent under Schedule I.

The circular further clarifies the tax treatment of short-term loans or credit extended by a DCA to buyers. Where the DCA is not acting as an agent under Schedule I, the loan provided to the buyer is an independent supply of service by the DCA, and the interest charged does not form part of the value of supply of goods by the principal. Such interest is separately exempt as a financial service.

However, where the DCA is acting as an agent and supplies goods in his own name, any credit extended to the buyer and interest charged for delayed payment loses its independent character and becomes part of the supply of goods. In such cases, the interest amount must be included in the taxable value of goods supplied by the DCA to the buyer.

The clarification aims to ensure consistent valuation and treatment of supplies involving del-credere agents under GST.