REIMBURSEMENT OF EXPENSES ON AIR TICKETS
Query (Issue) Started By: – ROHIT GOEL Dated:- 24-1-2018 Last Reply Date:- 31-1-2018 Goods and Services Tax – GST
Got 12 Replies
GST
WHETHER A SERVICE PROVIDER WHO GET REIMBURSEMENT OF TRAIN TICKETS, AIR TICKETS ON ACTUAL BASIS LIABLE TO PAY GST @18% ON THE COST OF TICKETS
Reply By Ganeshan Kalyani:
The Reply:
Can you please elaborate your query with an example.
Reply By ROHIT GOEL:
The Reply:
Example: A chartered Accountant travel by air and cost of air ticket reimbursed by client. Question whether gst is to be charged on cost of air ticket along with audit fees
Reply By KASTURI SETHI:
The Reply:
NOT required to pay GST on cost of tickets. Cost of ticket cannot be part of transaction value because it does not go into your pocket. You pay and then get reimbursement. GST already paid. No double taxation.
Reply By MARIAPPAN GOVINDARAJAN:
The Reply:
Whether the service provider can take input tax credit on the air ticket of C
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y in the name of client but paid by CA, then pure agent concept comes in picture. In that case also the CA will bill separately for ticket inclusive of GST amount without creating liability for GST but for that all the condition of pure agent has to be fulfilled by client as we as pure agent.
Reply By KASTURI SETHI:
The Reply:
Yes. Sir. I agree with you to the extent of concept of pure agent. C.A. works as pure agent also.
Reply By Himansu Sekhar:
The Reply:
With humility I slightly differ from Sri Ruia's view.
As per Rule 33 of the CGST Rules,2017 .Value of supply of services in case of pure agent.-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 auth
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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.
In the instant case, the expenses towards the travel are n the interest of the client. It is not a pure agent concept. Be that the case, every body will not include many expenses like Hotel bills, Restaurant bills and other expenses incurred by the CA during the provison of the service.
Reply By Ganeshan Kalyani:
The Reply:
CA should not enjoy the benefit of air travel. He just
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