commission agent - pure agent

[Richa Goyal]

I am working as an agent and raising a bill as below

service purchased as pure agent: 60000

gst on pure agent @5% 3000

commission 30000

gst @18% 5400

Total 98400/-

Question: Invoice of ₹ 63,000/- for services as a pure agent has been raised on me and I am entitled to take credit for the same. Do I show the amount as a pure agent as 63,000/- or of only ₹ 60,000/- .

Kindly guide.

[KASTURI SETHI]

Are you sure you are a pure agent ? I doubt you conform to the parameters of 'Pure Agent'. What is the nature of service i.e. for what commodity ? Best examples of Pure Agent are CHA, C & F Agent. Nomenclature of services of pre-GST era can be used for clarification purpose etc.

[Himansu Sekhar]

In this case you are not a pure agent. Pure agent portion is not taxed. In any way it can be shown as 60000 ,commission shown extra

[Richa Goyal]

Sir,

We are travel agents and we sell the packages taken from other operators. we only charge GST on the commission taken by us .. the tour packages come with GST... Since we are buying the package on behalf of the client and selling it to the client at the same rate and charge commission for the sale of package, it would be covered under pure agent services. ..

[KASTURI SETHI]

You should be satisfied with reply of Sh.Himansu Sekhar Ji. Pure agent is not owner of goods or services. Pure agent does not purchase and sells. He provides services for and on behalf of another person. He is only intermediary. He cannot add any amount to ₹ 60'000/-. (Example given by you.) If he adds, he is not pure agent. GST is to be paid by you on amount of commission. Thus GST paid is on account of your outward supplies. How can you take ITC on this ? ITC is to be taken for inward supplies received by you and used in the course of business or furtherance of business.

AI Summary

Pure agent treatment: intermediary margins excluded from taxable value; GST applies only on commission and not on principal costs. A pure agent must act for and on behalf of the principal without becoming owner or adding margin; amounts paid as a pure agent are excluded from the agent's taxable value and are not subject to GST, while GST is chargeable on the agent's commission. If an intermediary purchases and resells (as with many travel-package transactions), the arrangement likely fails the pure agent test and the agent's taxable value and GST treatment must reflect the reseller nature rather than pure-agent exclusion.