Rules Rule 33 of CGST Rules i.e. Valuation of Pure Agent Services

Financial Year: 2017

Rule 33 of CGST Rules

 

Value of supply of services in case of pure agent

 

 

Notwithstanding anything contained in the provisions of this Chapter,

the expenditure or costs incurred by a supplier

as a pure agent

of the recipient of supply

shall be excluded from the value of supply,

if all the following conditions are satisfied, namely:-

 

(i) the supplier acts as a pure agent

of the recipient of the supply,

when he makes the payment to the third party on authorisation by such recipient;

 

(ii) 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; and

 

(iii) 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.

 

Explanation:-

 

For the purposes of this rule, the expression ?pure agent  means a person who-

 

(a) 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;

 

(b) neither intends to hold

nor holds any title to the goods or services or both

so procured or supplied as pure agent of the recipient of supply

 

(c) does not use for his own interest such goods or services so procured; and

 

(d) 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.

 

Illustration.- Corporate services firm A is engaged to handle the legal work pertaining to the incorporation of Company B. Other than its service fees, A also recovers from B, registration fee and approval fee for the name of the company paid to the Registrar of Companies. The fees charged by the Registrar of Companies for the registration and approval of the name are compulsorily levied on B. A is merely acting as a pure agent in the payment of those fees. Therefore, A‘s recovery of such expenses is a disbursement and not part of the value of supply made by A to B.

 

 

Thanks

CA Rahul Gupta