Reimbursement of additional processing charges

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This discussion clarifies the reimbursement of additional processing charges between three companies (A, B, and C) due to pandemic-related requests. It addresses how Company B, which pays these charges to subcontractor A, should recover 50% from Company C. The key points covered are the base amount for calculating the 50% recovery and the applicable GST rate on the reimbursed amount.

Manoj Chauhan

Manoj Chauhan (Querist)

14 May 2020 Dear Sirs/Madams,

>> Suppose there are 3 companies : A, B and C
>> A is a subcontractor for B for which B pays processing charges to A
B sells the finished goods to C
>> On account of the pandemic of Coronavirus, C asks B to pay some "additional/extra"
processing charges to A on equal sharing basis (Additional processing charges shall be borne
by B and C in the ratio of 1 : 1)
>>Suppose A raises a bill on B for additional processing charges of Rs.100 + 5% GST
>>As agreed, B will recover 50% from C. So, in this case, please answer the following:
(1) On which amount 50% shall be computed
(2) Please state the rate of GST (if applicable) which B shall charge on the 50% reimbursement from C
Thanks in advance.