![]() In the above example availing the expert’s service recipient behalf is an additional supply. Even when the supplier mentions about the out of pocket expenses which he may incur during his supply as extra in his engagement letter, such expenses/supply should be an addition to the services he supplies on his own account. In the above explanation, the important thing to consider is, the pure agent does not use the goods/service he procures during his supply for his own interest and this condition needs to be determined from the terms of the contract. NoĬertificate from an Expert on behalf of the recipient (Actual) On completion of his service, he issues an invoice for his supply with reimbursement of expenses incurred during rendering the service. does not use for his own interest such goods or services so procured and 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.Ī chartered Accountant takes up income tax appeal services to represent his client in the Tribunal. neither intends to hold nor holds any title to the goods or services or both so procured or supplied as a pure agent of the recipient of supply ģ. ![]() 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 Ģ. 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.Įxplanation – For the purposes of this rule, the expression “pure agent” means a person who-ġ. 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 andģ. the supplier acts as a pure agent of the recipient of the supply when he makes the payment to the third party on authorization by such recipient Ģ. When a supplier incurs any expenditure or costs on behalf of the recipient during his supply of goods/services shall be excluded from the value of supply – if all the following conditions are satisfied, namely, –ġ. Rule 33 and the explanation can be understood as under: “ Rule 33 – Value of supply of services in case of pure agent” under Section 15 – Value of Taxable supply of CGST Act 2017, discusses the conditions for a supply to be considered as Pure agent supply and through an explanation, it defines “Pure agent”. The term Agent/Pure Agent is not new to Indirect tax laws, this concept is been borrowed from the erstwhile service tax law under the” Determination of value rules 2006″. The person who acts on behalf of someone can be termed as Agent. Treatment of reimbursement expense under GST ![]() In audit/advisory services reimbursement of expenses arises when a supplier incurs any expenses to undertake a transaction on behalf of the recipient who is supposed to incur such expenses on his own account. our Admin teams are gearing up to prepare professional charges through the GST invoices must be wondering about the treatment of reimbursement of out of pocket expenses to be collected from the clients.ĭictionary meaning of reimbursement – the act of paying back money to somebody which they have spent or lost. It’s an audit season and all of us are busy in planning and executing audits under Companies Act, GST Act, and Income Tax Act.
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