Neeraj Joshi (Accounts executive) (97 Points)
18 May 2019DEAR ALL,
ONE OF MY PARTY GAVE ME A PROFESSIONAL FEE INVOICE WITH 18 % IGST CHARGE ON INVOICE & ONE ANOTHER INVOICE FOR REIMBURSEMENT OF CONVEYANCE WHICH IS ALSO CHARGED 18 % IGST.
I JUST WANT TO KNOW THAT GST ON REIMBURSEMENT OF CONVEYANCE IS APPLICABLE OR NOT.
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narendra
(Accountant)
(281 Points)
Replied 18 May 2019
Ideally it forms part of "taxable value of supply" as per section 15(2)(c) of CGST Act 2017, which covers it under ancillary expenses incurred in relation to the principal supply.
But if the following conditions laid down in Rule 33 of CGST Act 2017 are met, then it can be excluded as reimbursement claimed as "Pure Agent".
(i) the supplier acts as a pure agent of the recipient of the supply, when he makes the payment to the third party on authorisation by such recipient;
(ii) the payment made by the pure agent on behalf of the recipient of supply has been separately indicated in the invoice issued by the pure agent to the recipient of service; and
(iii) the supplies procured by the pure agent from the third party as a pure agent of the recipient of supply are in addition to the services he supplies on his own account.
Note: For the purpose of above rule a "Pure Agent" is a person who,
(a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both;
(b) neither intends to hold nor holds any title to the goods or services or both so procured or supplied as pure agent of the recipient of supply;
(c) does not use for his own interest such goods or services so procured; and
(d) receives only the actual amount incurred to procure such goods or services in addition to the amount received for supply he provides on his own account.
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