TaxTMI 
TaxTMI 
XYZ (Proprietory Concern) and PQR(Proprietory Concern) are related persons (Brothers). On behalf of PQR, XYZ had paid the amount of Income Tax and other taxes to Govt. and then subsequently recovered from PQR. Will this amount to service provided to related person under Schedule – I of Section – 7 and even if there is no consideration, XYZ will be liable to pay GST on it?
Service to related person
14 Sep 2021 
5 Replies 
1295 Views Asked by
Pure agent concept: payments made on behalf of a related person are not taxable supplies under GST rules.
Payments of taxes by one related proprietor on behalf of another, later recovered from that person, qualify as a pure agent activity and do not amount to a taxable supply; where the payer does not provide a business activity but merely facilitates statutory payments for the recipient, the transaction is out of scope of supply and not captured by Schedule I as a support service. (AI Summary)
Payments of taxes by one related proprietor on behalf of another, later recovered from that person, qualify as a pure agent activity and do not amount to a taxable supply; where the payer does not provide a business activity but merely facilitates statutory payments for the recipient, the transaction is out of scope of supply and not captured by Schedule I as a support service. (AI Summary)