GST on reimbursements

[Madhavan iyengar]

Company A is based in India and sells the products in India to customers These products imported from its Parent B located in USA

Company A incurs marketing and advertising expenditure and this expenditure is reimbursed by Parent company B ( ie back to back reimbursement)

Query: Will the reimbursement of marketing and advertisement expenses received by Company A in India from its Parent B Located in USA liable for GST in the hands of Company A

AI Summary

GST on reimbursements: taxability depends on whether marketing cost recoveries are taxable consideration or pure agent pass through.
Treatment of reimbursements for marketing and advertising hinges on whether they are taxable consideration forming part of the value of supplies made in India or are pure agent pass through recoveries. Contributors argue both positions and reference the transaction value principle and Section 13(6) IGST, emphasising factual tests: contractual linkage to sale, principal versus agent role, and separate invoicing and identifiability of the reimbursed costs.