GST on reimbursement of expenses

[Kaustubh Karandikar]

XYZ(India) supplying services of Freight Forwarders / Clearing and forwarding agents and are mainly in providing transportation services in relation to import and export by sea and air. During providing these services, they pay on behalf of their client certain charges to different authorities and then get it reimbursed from their client at actuals. 1) Is XYZ required to pay GST on these charges recovered? If no, are they required to proportionately reverse the input tax credit for common services since not charging GST on reimbursement?

AI Summary

XYZ Freight Forwarding: No GST on Reimbursed Expenses When Acting as 'Pure Agent,' No ITC Reversal Required A discussion on a forum addressed whether XYZ, a company providing freight forwarding services, must pay GST on charges reimbursed by clients for expenses paid on their behalf. Three participants agreed that if XYZ acts as a 'pure agent,' it is not required to charge GST on these reimbursements. Consequently, there is no need to reverse the input tax credit (ITC) for common services, as these reimbursements do not qualify as exempt supplies or common services that necessitate ITC reversal.