Pure Agent Under Rule 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.
Almost every professional invoice has a line for reimbursements — travel, court fees, statutory filing fees, stamp duty, testing charges. The instinct is that these are pass-throughs and should not bear GST.
Sometimes that is right. Rule 33 sets out when — and the requirements are stricter than most invoices satisfy.
Expenditure incurred by a supplier as a pure agent of the recipient is excluded from the value of supply only if all three conditions in Rule 33 are met — payment to the third party on the recipient's authorisation, the payment separately indicated in the invoice, and the procured supplies in addition to the supplier's own services. And the supplier must satisfy all five limbs of the definition of "pure agent" in the Explanation. Fail any one, and the reimbursement is part of the value and bears GST at the rate of the main supply.
The three conditions in the rule
(i) The supplier acts as a pure agent of the recipient when he makes the payment to the third party on authorisation by such recipient.
(ii) The payment made by the pure agent on behalf of the recipient has been separately indicated in the invoice issued by the pure agent to the recipient.
(iii) The supplies procured by the pure agent from the third party as a pure agent of the recipient are in addition to the services he supplies on his own account.
Condition (iii) is the one that defeats most claims. A travel cost incurred to deliver your own service is not a supply procured in addition to it — it is a cost of providing it, and s.15(2)(c) brings incidental expenses into value.
The five limbs of "pure agent"
The Explanation defines a pure agent as a person who:
(a) enters into a contractual agreement with the recipient of supply to act as his pure agent to incur expenditure or costs in the course of supply;
(b) neither intends to hold nor holds any title to the goods or services so procured or supplied as a pure agent;
(c) does not use for his own interest such goods or services so procured;
(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.
Read together with the three conditions, the picture is a genuine agency: the recipient authorises, the agent pays, the agent takes no title and no benefit, and recovers exactly what was paid.
What usually qualifies
- Statutory fees paid on behalf of a client — ROC filing fees, court fees, stamp duty, government application fees, where the receipt is in the client's name and the client authorised the payment.
- Registration fees paid to an authority in the client's name.
- Duties and taxes paid on the client's behalf as a customs broker, where the bill of entry is in the importer's name.
- Port and terminal charges paid by a freight forwarder acting as agent, where the underlying document names the client.
The common feature: the third party's document names the client, and the client is the person legally liable for the payment.
What usually does not
- Travel and accommodation for the supplier's own staff. The supplier used the service. Limb (c) fails, and s.15(2)(c) brings it in as an incidental expense.
- Courier and printing costs incurred in delivering the supplier's work. Not "in addition to" the service.
- Subcontractor charges. The supplier holds title to the subcontracted service and re-supplies it. Limb (b) fails.
- Costs with a mark-up. Limb (d) requires only the actual amount. Any margin destroys the pure agent character for that item.
- Bulk or estimated recoveries. "Out-of-pocket expenses at 10% of fees" is not the actual amount incurred.
- Anything without a contractual agency mandate. Limb (a) requires a contractual agreement.
The documentation that makes it work
A written mandate. The engagement letter should authorise the supplier to incur specified categories of cost as pure agent on the client's behalf. A general engagement letter with no agency clause fails limb (a).
Third-party documents in the client's name. This is the single strongest evidence. Where the receipt names the supplier, the agency characterisation is much harder to sustain.
Separate presentation on the invoice. Condition (ii) is express. The reimbursement must appear as a distinct line, outside the taxable value, not netted or bundled.
Exact recovery. No rounding up, no handling charge on the same line. A separate, taxable handling fee is fine — a mark-up inside the reimbursement is not.
A reconciliation. For each reimbursement, the third-party document, the amount paid and the amount recovered should tie exactly.
The related provision: section 15(2)(b) and (c)
Rule 33 is an exclusion carved out of value. Two inclusion provisions pull in the other direction and should be read alongside it.
s.15(2)(b) includes any amount that the supplier is liable to pay in relation to the supply but which has been incurred by the recipient and is not included in the price. That is the mirror situation — the recipient paying the supplier's cost.
s.15(2)(c) includes incidental expenses, including commission and packing, charged by the supplier to the recipient, and any amount charged for anything done by the supplier in respect of the supply at the time of or before delivery.
Between them, these two sub-sections capture almost everything that is not a genuine pure-agent pass-through. Rule 33 is a narrow door, not a general reimbursement exemption.
Key takeaways
- All three conditions in Rule 33 and all limbs of the definition must be satisfied.
- The key test is that the procured supply is in addition to the supplier's own service.
- The supplier must hold no title, take no benefit, and recover only the actual amount.
- A contractual agency mandate and third-party documents in the client's name are the core evidence.
- The reimbursement must be separately indicated in the invoice.
- Anything failing Rule 33 is caught by s.15(2)(c) as an incidental expense.
Read next
- Inclusions in Value of Supply
- Transaction Value and the Sole Consideration Test
- Valuation Rules 27 to 35 Explained
- Value of Supply: Determining the Taxable Value
Disclaimer: Positions stated as on 5 September 2026, based on the CGST Rules as amended to 31 March 2026 (ICAI Bare Law, 12th edition).