Valuation of rent a cab services

[Asked by Guest]

Whether toll charges, permit charges and parking charges collected indicated separately in the invoice as reimbursement chargeable to GST?

[Alkesh Jani]

Sir, expenses incurred by the recipient on behalf of the supplier, incidental expenses like commission & packing incurred by the supplier, interest or late fees or penalty for delayed payment and direct subsidies (except government subsidies) are required to be added to the price (if not already added) to arrive at the taxable value (refer Section 15(2) of the CGST Act, 2017).

In view of above, I am of the view that, toll charges, permit charges and parking charges collected are to be added to arrive at taxable value, even if the said charges are paid by your client during the transit.

Our expert may correct me if mistaken

Thanks

[KASTURI SETHI]

I concur with the views of Sh.Alkesh Jani Ji.

Thank you Sir. But toll charges are exempted​ vide entry 23 of 12/2017-ct notification. Still to be added to the value?

[KASTURI SETHI]

Yes. Exemption has no link as these are expenses.

[KASTURI SETHI]

And no deduction is allowed here on the ground of exemption from GST.

[Rajagopalan Ranganathan]

Sir,

In my opinion Sl. No.23 of Notification No. 12/2017- Central Tax (Rate) dated 28.6.2017 exempts gist payable on toll charges collected by the person in charge of the toll booth.station. It is not exempting inclusion of toll charges in the value of the goods or services or both supplied.

In view of the provisions of Section 15 (2) (c) of CGST Act 2017 " incidental expenses, including commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods or supply of services" is includible in the value of supply. Therefore except CGST, SGST or UTGST all other expenses incurred for the supply is includible in the value of supply.

Thank you very much to both of you Sir.

[YAGAY and SUN]

In our view also such charges/expenses are required to be included to arrive at taxable value on which GST would be chargeable.

[Kishan Barai]

Its a kind of services when cab man pays toll instead of the client. #GST Chargeable

[Ganeshan Kalyani]

Toll charges etc shall have to be added to the value to pay GST. Pure agent concept will not work here.

[YAGAY and SUN]

Relevance of Pure Agent Under GST

The concept is borrowed from the erstwhile Service Tax Determination of Value Rules, 2006 and carried forward under GST.Under the GST Valuation 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 thegoods 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; and

(d) receives only the actual amount incurred to procure such goods or services in addition to the amount received for the supply he provides on his own account.

Some examples of pure agent are:

1. Port fees, Port charges, Custom duty, dock dues, transport charges etc. paid by Customs Broker on behalf of owner of goods.

2.Expenses incurred by C&F agent and reimbursed by principal such as freight, godown charges.

[Ganeshan Kalyani]

Correct Sir.

AI Summary

Valuation of reimbursed charges: toll, permit and parking reimbursements are includible in GST taxable value absent pure agent conditions.
Reimbursed toll, permit and parking charges collected by a rent a cab supplier must be included in the taxable value for GST. Exemption of the charge itself does not allow deduction from transaction value. The Pure Agent concept applies only if contractual and factual conditions are strictly met; otherwise such reimbursements are aggregated into the GST base.