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Pure Agent Concept in GST

Goods and Services Tax - GST Law and Procedure - 08B - INTRODUCTION The GST Act defines an Agent asa person including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another. So, who is a pure agent and why is a pure agent relevant under GST? Broadly speaking, a pure agent is one who while making a supplyto the recipient, .....

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cept by taking an example.A is an importer and B is a Custom Broker. A approaches B for customs clearance work in respect of an import consignment.The clearance of import consignment and delivery of the consignment to A would also require taking service of a transporter.So A, also authorises B, to incur expenditure on his behalf for procuring the services of a transporter and agrees to reimburse B for the transportation cost at actuals.In the given illustration, B is providing Customs Brokers se .....

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n Rules 2017, a pure agent is given the following meanings. A 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 provided as pure agent of the recipient of supply (c) does not use for his own interest such goods or services so procured (d) receive .....

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pon in the contract.In such case, the Customs Broker would be using the transport service for his own interest (as the agreement requires him to deliver the goods at the importers place) and thus would not be considered as a pure agent for the services of transport procured. Another important fact is that, the person who provides any service as a pure agent receives only the actual amount for the services provided. Coming back to our example of Importer and Customs Broker, the agreement provides .....

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for levy of GST. The preceding para explains who will be considered as a pure agent. The valuation rules provide that expenditure incurred as pure agent, will be excluded from the value of supply, and thus also from aggregate turnover. However, such exclusion of expenditure incurred as pure agent is possible only and only if all the conditions required to be considered as a pure agent and further conditions stipulated in the rules are satisfied by the supplier in each case. The supplier would h .....

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red 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 In case the conditions are not satisfied, such expenditure incurred shall be included in the value of supply under GST. The following illustration will make the concept clearer: 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 .....

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