GST on Reimbursements and Pure Agent Transactions: What Finance Teams Should Check in 2026
Calling a line item “reimbursement” does not automatically keep it outside GST value. The pure-agent exclusion is narrow and evidence-heavy. If the Rule 33 conditions are not met, recovered expenses can become part of taxable value.
The key rule: reimbursement is not magic
CGST Rule 33 allows exclusion of expenditure or costs incurred by a supplier as a pure agent of the recipient only when specified conditions are satisfied. The supplier must act as a pure agent, pay a third party on authorisation of the recipient, separately indicate the amount on the invoice, and procure those supplies in addition to the supplier’s own service.
For the connected rule or filing step, see GST Value of Supply Calculator — Discounts, Subsidies and Pure Agent.
Pure-agent checklist
| Condition | Practical evidence | Risk if missing |
|---|---|---|
| Contractual authorisation | Agreement/engagement letter says supplier acts as pure agent for specific costs. | Recovery may be treated as part of taxable value. |
| Payment to third party on behalf of recipient | Third-party invoice/receipt and payment proof. | Looks like supplier’s own input cost. |
| Separate indication in invoice | Reimbursement line shown separately from service fee. | Harder to prove exclusion. |
| No title/use for own interest | Supplier does not consume the goods/services for itself. | Pure-agent argument weakens. |
Examples finance teams see often
- ROC/statutory fees paid by a consultant on behalf of a company.
- Travel cost recovered as part of a consultancy assignment.
- Courier, accommodation or printing charges billed back to client.
- Government fees paid by professional firms while executing compliance work.
How to draft the invoice
If the position is pure agent, the invoice should show professional fee and pure-agent recovery separately, with supporting attachments. If the condition is not met, avoid artificially excluding it; valuation under Section 15 may require inclusion in taxable value.
Common mistakes
- No pure-agent clause in engagement letter.
- Third-party invoice is in the supplier’s name, not recoverable as pure agent on facts.
- Supplier adds mark-up but still calls it reimbursement.
- No backup file at year-end audit.
Official References Used
This draft uses official GST law, rules, GST Council, CBIC/GST portal and government-source material only. Before publishing, re-check whether any notification, circular, rule text or portal workflow has changed after the draft date.
- CBIC Tax Information: CGST Rule 33 — pure agent exclusion
- CBIC Tax Information: CGST Section 15 — value of taxable supply and discounts
- CBIC Tax Information: CGST Section 31 — tax invoice requirements
- CBIC Tax Information: CGST Rule 46 — tax invoice particulars
Frequently Asked Questions
Source and review trail
Use the current official instrument, portal or regulator publication before acting. This panel separates the category authority from page-specific references.
- Primary category
- GST & Indirect Tax
- Official starting point
- www.gst.gov.in