Non Taxable Supply vs Non GST Supply

[Vaishnavi Bubesh]

Dear Experts,

The definition of exempt supply u/s 2(47) of CGST Act includes Non Taxable Supply. Does the term 'non taxable supply' is equivalent to 'Non-GST supply' as per table 3.1.e of Form GSTR-3B & Table -8 of GSTR-1?

If yes. Whether ITC reversal u/r 42 needs to be computed on total of (exempt supply + non gst supply )?

We are showing reimbursement amount in Invoice as Non GST supply in GSTR-1 & 3B. whether reversal u/r 42 is required on non gst supply?

[Amit Agrawal]

What is cause of 'reimbursement'? Is it recovery as 'pure agent' referred u/s 33?

[Amit Agrawal]

Please reads as .......... u/r 33

[Vaishnavi Bubesh]

Dear Amit Ji,

Yes. the reimbursements are amount recovered from customer as pure agent, as certain expense are incurred on behalf of customer, which is shown in invoice.

[KASTURI SETHI]

There is a lot of difference between 'non-taxable supply' and 'non-GST Supply'. Non-GST supply means out of the scope of GST i.e. petrol, diesel, LPG , liquor etc.

Section 2 (78) of CGST Act: “non-taxable supply” means a supply of goods or services or both which is not leviable to tax under this Act or under the Integrated Goods and Services Tax Act;

Section 2 (47) of CGST Act “exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be wholly exempt from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply;

Exempt supply includes non-taxable but does not include non-GST supply.

[Amit Agrawal]

Reimbursement of expenses as 'pure agent' u/s 33 is not part of 'Value of supply' u/s15.

Accordingly, same cannot be equated with non-taxable supply or non-GST supply and you should not show them as Non-GST supply in Form GSTR-3B.

Consequently, Rule 42 & 43 will not be into picture for such reimbursements.

P.S. Ideally, such reimbursements should not be part of your turnover in your books of accounts, but same should be adjusted / knocked off against corresponding expenses incurred by you on behalf of client.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[KASTURI SETHI]

I fully agree with Sh.Amit Agrawal Ji.

The querist must be able to differentiate between 'disbursement' and 'reimbursement' with documentary evidence.

[KASTURI SETHI]

Illustration in Rule 33 talks of disbursement. So one has to be careful.

[Shilpi Jain]

Agree that pure agent reimbursements are not part of turnover/taxable value i.e. aggregate turnover, So no ITC reversal required.

[Padmanathan KV]

Agree with Ld Amit ji. No reversal is required u/r 42-43 for pre agent reimbursement amount.

Reimbursement as a pure agent is excluded from the value of supply. hence it shouldn't be disclosed as non taxable supply in R1/R3B.

If it is for FY 22-23, kindly amend R1 and rectify in R9 as well.

AI Summary

Distinguishing Non-Taxable vs. Non-GST Supplies: Understand ITC Reversal and Reporting Rules Under GST Framework A discussion on a forum revolves around the distinction between 'non-taxable supply' and 'non-GST supply' under the GST framework. The query seeks clarification on whether non-taxable supplies equate to non-GST supplies in tax forms and if Input Tax Credit (ITC) reversal is necessary for these supplies. Experts clarify that non-GST supplies are outside the GST scope, while non-taxable supplies are exempt from tax under the CGST Act. Reimbursements as a 'pure agent' should not be considered in turnover or shown as non-GST supplies in tax forms, hence no ITC reversal is needed.