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GST on reimbursement of expenses vis - a - vis reversal of ITC

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Kaustubh Ram Karandikar

Corporate Consultant- Central Excise &am

519 Points Posted on 22 September 2021

XYZ(India) supplying services of Freight Forwarders / Clearing and forwarding agents and are mainly in providing transportation services in relation to import and export by sea and air. During providing these services, they pay on behalf of their client certain charges to different authorities and then get it reimbursed from their client at actuals. 1) Is XYZ required to pay GST on these charges recovered? If no, are they required to proportionately reverse the input tax credit for common services since not charging GST on reimbursement?

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Quick Summary

This discussion clarifies GST obligations for freight forwarders who incur expenses on behalf of clients and seek reimbursement. It explains that GST is not typically charged on these reimbursed amounts if a separate invoice is issued and the client pays the full amount including GST. Furthermore, it addresses input tax credit (ITC) reversal, stating there's no such requirement under the 'pure agent' provisions as per Rule 33 of the CGST Rules.

VIKAS ESNAPURAM

CA-JOB

226 Points Posted on 22 September 2021

1). GST is not required to be paid if a separate invoice is being issued by XYZ Ltd to their clients for the same and the amount paid is including Gst to XYZ ltd by their clients you should also have a valid TAX Invoice on your name from those authorities for which amount is being paid to claim ITC.

2). No concept of reversal of ITC.