Managing Out-of-Pocket Disbursements: Client Reimbursements and GST Input Reconciliation

The Pure Agent vs. Value-Added Service Distinction

Agencies frequently incur out-of-pocket expenses on behalf of clients: Google/Meta ad spend, stock photo licenses, cloud hosting servers, and flights. Billing these back incorrectly triggers double taxation or disallowed Input Tax Credit (ITC).

The 'Pure Agent' Rule Under GST

Under GST Valuation Rules, expenditures incurred as a 'pure agent' can be excluded from the taxable value of services provided specific statutory conditions are met. Otherwise, expenses must be billed as standard service disbursements with appropriate tax markups.

Relaso Agency Suite categorizes reimbursable disbursements, attaches vendor receipts, and handles pure agent tax calculations flawlessly.