When an agent supplies in behalf of principal , that supply is added in the turnover of agent . This supply will be filed by agent in his outward supply form. Hence , principal will not file it.
Is this treatment correct?
The principal will pay the agent commission or fee based on sales volume. The agent will collect all the consideration from customers and give it to the principal after deducting his fee or commission. So, based on this, since inventory risks and credit risks are not involved, similarly, taxation is not done by the agent.
In the next scenario, if the agent buys the goods from principal and sells them, the agent becomes the principal and records COS in his financial statements and files for taxes as well.
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