Value of supply of services in case of pure agent
Rule 33 of the CGST Rules
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Pure agent: expenditure a supplier incurs purely as an agent of the recipient is kept out of the value if he is authorised to pay, the payment is separately shown on the invoice and the goods or services procured are additional to his own supply. This is the rule behind excluding reimbursed statutory fees from a professional’s bill.
The exact words of the law
2,059 characters, uneditedReproduced from the CBIC text. We explain it above — but you should always be able to read it yourself.
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(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.
Where this comes from
Text reproduced from the Central Board of Indirect Taxes and Customs, as available on 2026-09-05. The explanation and practice notes above are GSTZone’s own, written for this hub. If you spot anything out of date, tell us and we’ll fix it — this hub is checked daily against CBIC.
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