Rule 33 of CGST Rules -Value of supply of services in case of pure agent

(updated as on 15.11.2017)

Notwithstanding anything containedin the provisions of this Chapter, the expenditure or costs incurred by a supplier as a pureagent of the recipient of supply shall be excluded from the value of supply, if all thefollowing conditions are satisfied, namely,-
(i) the supplier acts as a pure agent of the recipient of the supply, when he makes thepayment 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 beenseparately indicated in the invoice issued by the pure agent to the recipient ofservice; and
(iii) the supplies procured by the pure agent from the third party as a pure agent ofthe 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 personwho-

(a) enters into a contractual agreement with the recipient of supply to act as his pureagent to incur expenditure or costs in the course of supply of goods or services orboth;

(b) neither intends to hold nor holds any title to the goods or services or both soprocured 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 inaddition 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 theincorporation 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 ofCompanies. The fees charged by the Registrar of Companies for the registration andapproval of the name are compulsorily levied on B. A is merely acting as a pure agent in thepayment of those fees. Therefore, As recovery of such expenses is a disbursement and notpart of the value of supply made by A to B.

CHAPTER IV

DETERMINATION OF VALUE OF SUPPLY

Chapter IV of CGST Rules, 2017 consists of nine rules relating toDETERMINATION OF VALUE OF SUPPLY rulesunder the GST regime. Both these rules are available for your ready reference.
Rule 27 :Value of supply of goods or services where the consideration is not wholly in money
Rule 28 :Value of supply of goods or services or both between distinct or related persons, other than through an agent
Rule 29 :Value of supply of goods made or received through an agent
Rule 30 :Value of supply of goods or services or both based on cost
Rule 31 :Residual method for determination of value of supply of goods or services or both
Rule 32 :Determination of value in respect of certain supplies
Rule 33 :Value of supply of services in case of pure agent
Rule 34 :Rate of exchange of currency, other than Indian rupees, for determination of value
Rule 35 :Value of supply inclusive of integrated tax, central tax, State tax, Union territory tax

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• Download CGST Rules,2017 last updated as on 15th November,2017