TRADE AND COMMERCE LEXICON
COMMISSION INVOICE
Also: Agency Commission Invoice · Facilitation Fee Invoice · Introducer's Invoice
DEFINITION
A Commission Invoice is a formal demand document issued by a trade facilitator, commission agent, or intermediary to the party from whom a commission is due — typically the Principal (seller) in a trade facilitation mandate — claiming payment of the agreed commission amount upon the occurrence of the commission trigger event.
A Commission Invoice is distinct from a commercial invoice (which is raised by the seller to the buyer for goods or services supplied). A Commission Invoice is a service invoice — it records the facilitator's entitlement to payment for the service of introducing and facilitating a commercial transaction between the Principal and the Introduced Party (buyer).
LEGAL BASIS
The right to issue a Commission Invoice arises from the mandate agreement, commission agency agreement, or referral agreement between the facilitator and the Principal. The invoice crystallises a payment obligation that:
Has already been contractually agreed (the commission rate and trigger event are defined in the mandate agreement).
Has been earned by the occurrence of the agreed trigger event (e.g. the Principal receiving payment from the Introduced Party).
Is now due and payable by the Principal to the facilitator within the agreed payment period (typically 30 days from invoice date).
A Commission Invoice without an underlying mandate agreement, commission agency agreement, or at minimum a written commission letter (Doc 08) is commercially difficult to enforce. Always ensure the contractual basis for the commission is documented before issuing the invoice.
MANDATORY FIELDS ON A COMMISSION INVOICE
COMMISSION INVOICE — ILLUSTRATIVE TEMPLATE
GST TREATMENT OF COMMISSION INVOICES
COMMON DISPUTES AND PREVENTION
RELATED DOCUMENTS IN THIS LIBRARY
Doc 94 — Lexicon Entry: Commission Invoice — All Frontier Global Nexus
| Invoice Number | A unique, sequential number — important for GST filing, accounting, and tracking. e.g. AFG/CI/2024/001. |
|---|---|
| Invoice Date | The date of issue. Should be within 7 days of the commission trigger event. The payment due date is calculated from the invoice date. |
| Facilitator's Details | Full legal name and registered address of the facilitating entity. IEC (if applicable). GSTIN (if GST-registered). Bank account details: account name, bank name, branch, account number, IFSC code (for INR payments); or IBAN + SWIFT BIC (for foreign currency payments). |
| Principal's Details | Full legal name and registered address of the party to whom the invoice is addressed (the payer). |
| Mandate Reference | The reference number and date of the underlying mandate agreement or commission agency agreement. Links the invoice to its contractual basis. |
| Introduced Party Reference | Name of the buyer / Introduced Party whose transaction generated the commission entitlement. |
| Trigger Event Description | A precise description of the commission trigger event: e.g. "Receipt of payment by [Principal] from [Introduced Party] in respect of Invoice No. [X] dated [date] for supply of [goods], as evidenced by bank credit of [currency and amount] on [date]." |
| Underlying Transaction Reference | The commercial invoice number, Shipping Bill number, or purchase order number of the underlying trade transaction. |
| Commission Base Value | The value on which the commission is calculated — stated clearly: "FOB value: EUR 150,000" or "Invoice value: USD 80,000." |
| Commission Rate | The agreed percentage rate as per the mandate agreement — stated explicitly: "Commission rate: 3% as per Mandate Agreement ref. [X] dated [date]." |
| Commission Amount | Base value × rate, stated in the agreed currency. e.g. "Commission due: EUR 4,500." |
| GST (if applicable) | If the facilitator is GST-registered in India: state whether GST applies. Export of services (to a non-resident Principal, payment in foreign currency) is typically zero-rated (0% IGST). If the Principal is an Indian resident — standard GST at 18% on commission services may apply. Always confirm with a GST adviser before raising the invoice. |
| Total Amount Due | Commission amount + applicable GST (or commission amount alone if zero-rated export of service). |
| Payment Due Date | Invoice date + agreed payment period. Standard: 30 days from invoice date. |
| Payment Instructions | Clear payment instructions: preferred currency, bank account details, reference to quote on payment (invoice number). |
| Late Payment Notice | Reference to any interest on late payment clause in the mandate agreement: e.g. "Interest at [X]% per annum accrues on overdue amounts from the due date." |
| COMMISSION INVOICE Invoice No.: AFG/CI/____/____ Invoice Date: _____________________________________________ Due Date: 30 days from invoice date FROM (Facilitator): All Frontier Global Nexus [Registered Address] IEC: _____________ GSTIN: _____________ TO (Principal): [Principal Legal Name] [Principal Registered Address] Mandate Reference: _____________ Dated: _____________ Introduced Party: _____________________________________________ COMMISSION PARTICULARS: Trigger Event: Receipt of payment by Principal from Introduced Party in respect of [Invoice / Shipping Bill / PO reference] dated _____________ for supply of [product description], confirmed by [bank credit / MT103 SWIFT ref] on _____________. Payment Instructions: Account Name: _____________ Bank: _____________ Branch: _____________ Account No.: _____________ IFSC: _____________ (for INR payments) IBAN: _____________ SWIFT BIC: _____________ (for foreign currency payments) Please quote Invoice No. _____________ on all payment communications. Authorised Signatory: _____________________________________________ |
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| Export of services — zero-rated | If the Principal is a non-resident entity (foreign company) and the commission is paid in freely convertible foreign currency — the facilitation service qualifies as an export of service under the GST Act. Zero-rated under GST (0% IGST). No GST charged on the commission invoice. The facilitator may claim a refund of input GST paid on related expenses. |
|---|---|
| Domestic service — 18% GST | If the Principal is an Indian-resident entity and the commission is denominated in INR — the facilitation service is a domestic supply. GST at 18% applies on the commission amount. The facilitator charges 18% GST on the invoice. The Principal can claim input tax credit on the GST paid if they are GST-registered. |
| Mixed arrangements | Where a single mandate involves both Indian and non-Indian principals, or where commission is partly in INR and partly in foreign currency — the GST treatment must be assessed separately for each component. Seek GST advice. |
| Trigger event dispute | Principal claims commission trigger has not occurred. Prevention: Define the trigger event with precision in the mandate agreement. Obtain documentary evidence (bank statement, MT103, shipping bill) at the time of invoicing. |
|---|---|
| Calculation base dispute | Principal disputes the base value used for commission calculation. Prevention: Specify the exact base value (FOB/CIF/invoice value) and the source document (Shipping Bill, commercial invoice) in the mandate agreement. Cross-reference invoice to the source document. |
| Scope dispute — product not covered | Principal claims the transaction does not fall within the mandate scope. Prevention: Define product scope and introduced party scope precisely in the mandate agreement. Issue an introduction letter at the time of introduction — document the link between introduction and transaction. |
| Tail period dispute | Principal claims the transaction occurred after the tail period expired. Prevention: Record the exact date of introduction. Calculate and document the tail period expiry date. Monitor all transactions within the tail period. |
| Circumvention | Principal transacts with the introduced party through a related entity or variant product to avoid commission. Prevention: NCNDA and mandate agreement to cover related parties, affiliates, and substantially similar products. |
| Related Document | Relevance |
|---|---|
| Doc 05 — Commission Invoice Template | The operative template document — contains the full commission invoice format ready for use. |
| Doc 07 — Commission Agency Agreement (Three-Party) | The three-party agreement that creates the legal basis for the commission invoice. |
| Doc 08 — Commission Letter (Simple) | The minimum written basis for a commission claim — used where a full agency agreement is not in place. |
| Doc 85 — Mandate Origination Checklist | Documents the mandate origination steps — commission invoice is the culmination of the process started here. |
| Doc 86 — Deal Execution Checklist | Phase 5 covers commission trigger, invoice preparation, and collection. |
| Doc 89 — Commission Collection Protocol (SOP) | The complete SOP for commission calculation, invoicing, tracking, and collection. |