Pure Agent explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Many service providers pay fees to third parties for a client, then bill them back. Whether that recovery is added to your taxable value depends on Rule 33 of the CGST Rules. If you qualify as a pure agent, the expense is excluded. If you do not, it is part of your value and attracts GST with the fee. The rule is strict, and the conditions are cumulative.
Under Rule 33, expenditure or costs incurred by a supplier as a pure agent of the recipient are excluded from the value of supply only if all of three conditions are met: (i) payment to the third party is made on the recipient's authorisation, (ii) the amount is separately indicated in the invoice, and (iii) the third-party supply is in addition to the services the supplier provides on his own account. The supplier must also fit the four-part definition of "pure agent" in the Explanation.
The three conditions in Rule 33
The exclusion applies if all of these are satisfied:
- The supplier acts as a pure agent of the recipient when he makes the payment to the third party on authorisation by the recipient.
- The payment made on behalf of the recipient is separately indicated in the invoice issued by the pure agent to the recipient.
- The supplies procured from the third party as pure agent are in addition to the services the supplier supplies on his own account.
Who counts as a "pure agent"
The Explanation defines a pure agent as a person who:
- (a) enters into a contractual agreement with the recipient to act as his pure agent to incur expenditure or costs in the course of supply of goods or services or both;
- (b) neither intends to hold nor holds any title to the goods or services so procured or supplied as pure agent;
- (c) does not use for his own interest the goods or services so procured; and
- (d) receives only the actual amount incurred to procure such goods or services, in addition to the amount received for the supply he provides on his own account.
Failing any one of (a) to (d), or any one of the three conditions, takes the recovery into your value of supply. A markup on the reimbursement, even a small one, defeats condition (d).
If you are unsure whether your client billing qualifies, a GST health check can test a sample of invoices against these conditions.
Examples the Background Material gives
- A corporate services firm handles the incorporation of a company and recovers the registration fee and name approval fee paid to the Registrar of Companies. Those fees are levied on the company itself, so the firm is only paying them on its behalf. The recovery is a disbursement and not part of the firm's value of supply.
- A travel agent books a railway ticket on behalf of the customer and recovers the ticket charge separately, along with the commission.
- A customs broker pays customs duty, dock dues, transport and port clearance charges for the importer and recovers them along with his commission.
- An advertising agency pays newspaper advertisement charges for the customer and recovers them separately along with its commission.
- In an ex-factory delivery contract, the supplier pays transportation charges on behalf of the recipient and recovers them separately along with the price of the goods.
Worked invoice example (illustration)
| Line | Amount (Rs.) | In value of supply? |
|---|---|---|
| Professional fee for company incorporation | 20,000 | Yes |
| ROC registration and name approval fees, paid on client's authorisation, shown separately, recovered at actual | 8,000 | No, pure agent |
| Additional "processing charge" added by the firm | 2,000 | Yes |
| Taxable value | 22,000 |
GST is charged at the applicable rate on Rs. 22,000, not Rs. 30,000. If the firm had marked up the ROC amount to Rs. 9,000, condition (d) would fail and the whole Rs. 9,000 would be in value. The figures are illustrative.
Evidence the Background Material recommends
The Background Material says the dealer must demonstrate with substantial evidence that the liability to incur the cost was on the recipient and that the dealer incurred it only for convenience. It recommends:
- a written contract between the supplier and the recipient, with clauses that point to compliance with every condition. Even without a written contract, the conditions can be established by other evidence, but a written contract is more persuasive;
- the invoice, bill or receipt from the third party being in the name of the recipient, who is the ultimate beneficiary; and
- the expense being separately shown in your invoice to the recipient.
A common way to lose the exclusion is to book expenses in the firm's own name and recover them in a lump sum with fees. That breaks condition (ii) and the name-on-the-bill test.
What the exclusion does not do
- The rule applies to supply of services, as the source states, and is a valuation exclusion. It does not make an agent who buys and sells on behalf of a principal a pure agent. The source notes that "agency supplies are different from pure agent".
- "Pure agent" amounts are not exempt supplies. The source explains they are "no supply" (GSTR-9 uses this label), not exempt or non-taxable supplies.
- Costs you incur for your own purposes, for example your own travel to do the work, are a cost of your service and are in value unless they fit Rule 33.
For the detailed comparison of tests, see pure agent under Rule 33: the three conditions and five tests.
Need help with client invoicing and disbursements?
If your firm recovers ROC fees, stamp duty, travel, courier or similar costs from clients, the way you document and invoice them affects your taxable value. We can review your engagement letters and invoice formats against Rule 33 through a GST health check, and help fix the reporting in your GSTR-1 filing.
Key takeaways
- Rule 33 excludes reimbursements from value only if all three conditions and the four-part definition are met.
- The client must authorise the payment, and the third-party bill should be in the client's name.
- The recovery must be shown separately in your invoice and recovered at actual cost.
- Any markup or own-use brings the amount into the value of supply.
- A written contract is the most persuasive evidence.
- Pure agent receipts are "no supply", not exempt supplies.
Read next
- Aggregate turnover: meaning and computation
- Margin scheme for second-hand goods: Rule 32(5)
- Pure agent under Rule 33: the three conditions and five tests
- Rule 46: every particular a tax invoice must carry
Disclaimer: Positions stated as on 30 September 2026, based on the CGST and IGST Acts and Rules as amended, the Finance Act 2026, and the ICAI Background Material on GST (14th Edition, July 2026). Verify current notifications before acting.