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

Pure agent reimbursements excluded from value of supply, so they need not trigger ITC reversal under GST rules. Non-taxable supply is distinct from non-GST supply: non-taxable supplies are included within exempt supply, while non-GST supplies are out-of-scope. Reimbursements treated as pure-agent recoveries are excluded from value of supply and aggregate turnover, should not be shown as non-GST supply in GSTR-1 or GSTR-3B, and do not attract Input Tax Credit reversal under the relevant rules; taxpayers must differentiate disbursements from reimbursements and amend returns if misreported.