Applicablity of gst on re-imbursement of expenses under rcm

This query is : Resolved

CA Naishadh trivedi (Querist)
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13 February 2018 Dear Experts,

Our company had engaged an advocate. As we all know, the services of advocate falls under RCM and therefore our company has to pay GST on it directly to Government. Therefore, the GST will be paid on professional fees charged by advocate under RCM.
However, the advocate has also claimed reimbursement of travelling expenses(on actual basis) and clerkage fees (on notional basis i.e 10%).

Question: Whether our company is also liable to pay GST under Reverse charge mechanism on such reimbursements???
Please provide your expert opinion quoting relevant rules and section.

Thank in advacne

Arpit

Arpit (Expert)
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13 February 2018 since the reimbursement amount that you have mentioned is not on actual basis, GST shall be paid on RCM basis on the said amount

CA Naishadh trivedi

CA Naishadh trivedi (Querist)
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13 February 2018 Dear Sir,

One reimbursement is on actual basis and other is on notional basis. Whether GST applicable on both or only on notional one only. Kindly quote section or rule.

Arpit

Arpit (Expert)
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13 February 2018 Naishadh - you can refer Rule 33 of the CGST Rules. It says that the expenditure or costs incurred by the supplier as a pure agent of the recipient of supply shall be excluded from the value of the supply provided the conditions mentioned in Rule 33 are fulfilled.

Therefore, GST shall be applicable only on the notional reimbursement and not on actual reimbursement

CA Naishadh trivedi

CA Naishadh trivedi (Querist)
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13 February 2018 Dear Sir,

As per my opinion, the following condition of pure agent is not satisfied:
1) "does not use for his own interest such goods or services so procured"

In the present case, supplier i.e advocate has used such services so procured

Arpit

Arpit (Expert)
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13 February 2018 but if the same is used exclusively for your client business then the pure agent condition shall be satisfied

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