Advance payment for pure agent

[Nagarajan PV]

Dear Experts,

Good Evening.

We are Customs Broker and we perform the role of 'PURE AGENT" for speedy Customs Clearance of Import and Export Activity.

During this process, we normally receive advances from our Customer for the following :

1. Customs Duty

2. Airline / Shipping Line / Freight forwarders

3. Container Freight Stations / Warehouse

All these expenses are paid on behalf of our Customer and billed to Customers as pure agent without any mark-up on these bills.

Due to introduction of GST, few of our Customers raised the issue of "Advance Payment requires to charged to GST"??

Kindly clarify.

Regards,

Nagarajan

AI Summary

GST on advances: tax arises at receipt for broker services, while true pure agent reimbursements remain outside tax.
Customs brokers' pass through reimbursements for third party costs, billed as pure agent recoveries without markup, are not taxable supplies, while the point of taxation rule makes tax on the broker's own services payable at receipt of advances; valuation rules should be applied to confirm treatment of reimbursements.