Chapter - IV of CGST Rules, 2017
DETERMINATION OF VALUE OF SUPPLY
RULE 33. Value of supply of services in case of pure agent (corresponding section 15)
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.