CA. Bhavik P. Chudasama
Quick Summary
In Industry still there are many confusions regarding what is Pure Agent and what are conditions to act as pure agent especially when there is a case of Reimbursement of Expenses. Under GST Act, Reimbursement of Expenses received from Recipient of Services/Goods is Not Taxable only if the Supplier o
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FAQ :
A Pure Agent is a supplier who enters into a contractual agreement with a recipient to incur expenses or costs on their behalf during the supply of goods or services. They do not intend to hold title to the procured goods/services and do not use them for their own interest, only recovering the actual amount incurred.
The conditions are: the supplier acts as a pure agent authorised by the recipient, payments made on behalf of the recipient are separately indicated on the invoice, and the supplies procured are in addition to the services the supplier provides on their own account.
The payment made by the pure agent on behalf of the recipient must be separately indicated in the invoice issued to the recipient. Reimbursements and the supplier's own service value should be clearly distinguished.
Yes, the supplier must be authorised by the recipient to make payments to a third party when acting as a pure agent. This authorisation is a crucial condition for qualifying as a pure agent.
No, a pure agent should only recover the actual amount incurred to procure goods or services. There should be no profit component added to the recovered amount.
The supplies procured by the pure agent from a third party must be in addition to the services that the pure agent supplies to the recipient on their own account.
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