Reimbursement of Traveling and visit

[Guest]

A manufacturer supplies equipment to a buyer. Due to incorrect installation by buyer equipment malfunctions. Buyer contacts seller to come urgently to resolve issue and agrees to bear traveling and visit expenses. The supplier travels by air and taxi to reach destination urgently and return. Buyer reimburses traveling expenses incurred to seller. Seller does claim ITC on traveling expenses incurred. Is GST applicable on reimbursement received for traveling and visit.

[DR.MARIAPPAN GOVINDARAJAN]

In my view it is applicable.

[Guest]

So if seller sends a third party to attend to the problem of buyer and pays the third party for visit and travel and gets reimbursement from buyer does GST apply. In this case he is just a agent in the transaction.

[DR.MARIAPPAN GOVINDARAJAN]

In case of a pure agent GST is not applicable. It is up to decide the nature of the agent.

[Pranav Shah]

I am of the view that seller is claiming ITC on travel expenses incurred by him then he has to pay output GST on income/re-imbursement received by him.

However alternatively if accounting is done in a manner where all the expenses incurred is shown as being done on behalf of buyer and exact amount is re-imbursed then GST will not be applicable as a pure agent. But no input GST credit be claimed by seller , if input credit is to be claimed it can be only be done by buyer.

[Guest]

Sorry there was a typing mistake. The seller does not claim ITC on GST paid for travelling expenses. Further the third party should raise invoice on buyer or seller as buyer paid for the Traveling and visit charges and received reimbursement from buyer. Please clarify

AI Summary

Reimbursement for travel: GST applies unless treated as pure agent, then no GST and buyer claims input tax. GST on reimbursement of travel depends on characterisation: if the supplier treats travel expenses as its own and claims input tax credit, the reimbursement is consideration and attracts output GST; if the supplier acts as a pure agent incurring expenses on behalf of the buyer with exact amounts invoiced or accounted accordingly, the reimbursement is not taxable and input tax credit belongs to the buyer.