To determine the value of the taxable benefit, all expenses incurred by a supplier as a mere representative of the recipient are excluded from the value of the delivery. Thus, the purely agent concept in the GST becomes more relevant by determining the tax value on which GST must be levied. i. the supplier acts as the recipient`s pure agent, if it pays the third party with the recipient`s permission; Example 2. X contracts with Y, a real estate agent to sell his house and on that Y gives an advertisement on television. Y billed X including tv advertising fees and service tax paid on the entire bill. In this case, the consideration for the service provided is that X pays Y. Y does not act as an agent on behalf of X if the television advertisement is received, even if the cost of the television advertisement is mentioned separately in the invoice issued by X. The advertising service is a wholesale service for the real estate agent to allow or facilitate him to provide his services as a real estate agent in order to better understand the concept. , consider an example as shown below: An importer asks a client broker to release his import shipment. To this end, the customs broker also needs the help of a carrier.
So the importer asks the client broker to make expenses for him and get reimbursed. The customs broker clears the shipment and transports it to the importer. Assistance and transportation costs are charged separately. The transportation costs he has charged are the amount he pays to the importer. In this case, Custom Broker never held the title of the show. Nor does he gain anything if he transports the shipment to the importer. When billing the importer, he separately reported the amount he paid for the transportation. Therefore, in this case, custom brokers are considered the pure agent of the importer.
(vi) payment of the pure representative on behalf of the recipient was indicated separately in the invoice issued by the representative; In the example of billing given by the self-rickshaw dealer, the service recipient or buyer is responsible for the costs because of the insurance and registration fees, and the merchant pays the service from his pocket for and on behalf of the buyer and then specifically claims that amount to the buyer. The merchant receives the same amount he spent and no more than that, even a rupee. If the trader recovers more than he spent, the trader will not be in the definition of pure agent under Rule 33 of the CGST rules. In the case of a simple agent, both charges are excluded from the value of the tax to achieve the correct amount of tax. (1) First, you need to know the difference between the words „refund“ and „payment.“ It is very important to understand the concept of pure agent. A simple agent is a registered tax payer who, on behalf of his client, is linked to other suppliers. Under this approach, it also undertakes, when providing services to the client, to receive other ancillary services from other service providers and pays expenses for its client. The actual expenses of a pure agent will then be claimed as a refund. In other words, in addition to the value of the services provided to his client, all other expenses incurred by a pure agent (on behalf of his client) are reimbursed.