1. Quick answer
A payment made to a government department, local authority or regulator does not automatically become exempt from GST, and a statutory fee recovered from a customer does not automatically become taxable. The correct treatment depends on the exact service/levy, the supplier, the recipient, the exemption entry, the contractual liability and—where a private supplier merely pays on behalf of its customer—whether Rule 33 pure-agent conditions are satisfied.
Identify the payment→Identify authority & service→Check exemption / RCM→Test pure agent→Value + invoice + ITC
Most important distinction: separate the statutory amount from the supplier's own professional, consultancy, facilitation, documentation or handling service. The two can have different GST treatment.
2. Legal framework
| Provision / source | Practical relevance |
|---|---|
| Section 7 | Determines whether an activity constitutes a supply. |
| Section 8 | Relevant where government-related charges are bundled with another supply and composite/mixed-supply analysis is required. |
| Section 11 | Provides the statutory basis for exemption notifications. |
| Section 15 | Determines taxable value where a taxable supply exists, including additional amounts connected with the supply. |
| Section 16 | Sets core ITC eligibility conditions for GST-bearing inward supplies. |
| Section 17 | Contains ITC restrictions and common-credit provisions. |
| Section 49 | Provides the framework for payment of tax and other amounts through the electronic liability/payment system. |
| Rule 33 | Allows qualifying pure-agent expenditure to be excluded from taxable value when all prescribed conditions are satisfied. |
| Notification 12/2017-Central Tax (Rate) | Contains multiple government-service and regulatory exemptions, each subject to its own description and conditions. |
Current legal principle: CBIC's sectoral FAQ expressly states that not all services supplied by Government or a local authority are exempt. Specific exclusions and taxable categories must be checked.
3. Government-service exemptions: never use a blanket rule
Notification 12/2017-Central Tax (Rate) contains several specific exemptions for government/local-authority services. The description and conditions of the individual entry control the result.
Registration / certificationCertain registration, testing, calibration, safety-check and certification services by government/local authorities are specifically covered by exemption entries, subject to their wording.
Constitutional functionsSpecified activities connected with Panchayat and Municipality functions can qualify where the notification conditions are met.
Small-value government servicesSpecific threshold-based exemption entries contain conditions and exclusions; the amount and nature of service must be tested.
Business recipientsGeneral government-service exemption is not unlimited for services supplied to business entities.
Department of PostsSpecified postal services are excluded from the broad government-service exemption.
Aircraft / vessel servicesServices relating to aircraft or vessels in or outside port/airport precincts have specific treatment and exclusions.
TransportTransport of goods/passengers has separate treatment and is excluded from the broad exemption.
RentingRenting of immovable property is separately treated and should not be assumed exempt merely because the landlord is government.
RCMSome government-to-business services can fall under reverse charge when specifically notified; identify the exact service before deciding who pays GST.
4. Pure agent and statutory-fee reimbursements
Rule 33 contains an unusually detailed test. It is not enough to write “reimbursement” on an invoice.
The recipient is liable to pay the third party.
The recipient authorises the supplier to make the payment.
The third-party contract/service is between the third party and recipient where required by the rule.
The recipient uses the third-party service procured through the supplier.
The amount is separately indicated on the supplier's invoice.
Only the actual amount paid is recovered.
The supplier does not hold/use the procured service for its own interest.
The third-party procurement is in addition to the supplier's own service.
Classic example: CBIC's valuation rules use a corporate-services firm paying ROC registration/name-approval fees for a client as an illustration of a qualifying pure-agent disbursement, where the statutory conditions are met.
Red flag: A supplier pays a government fee that is legally its own liability and then labels the amount “reimbursement”. The pure-agent exclusion should not be assumed.
5. Charge-by-charge classification map
| Payment | First question | Evidence to retain |
|---|---|---|
| ROC / statutory filing fee | Who is legally liable? | Authority challan, filing receipt, engagement letter. |
| Licence / renewal fee | Government statutory fee or private service? | Licence application and authority receipt. |
| Inspection / certification fee | Which authority supplied the service? | Inspection/certification document. |
| Municipal charge | What exact municipal function/charge is involved? | Demand notice, receipt, contract. |
| Stamp duty | Statutory levy or service fee? | Stamp duty receipt. |
| Registration charge | Authority fee or private registration service? | Registration receipt and vendor invoice. |
| EMD/security | Refundable security or consideration? | Tender terms, deposit ledger. |
| Penalty/late fee | Statutory penalty/late charge or consideration? | Order/challan and statutory basis. |
| Handling/convenience fee | Supplier's own service? | Contract and tax invoice. |
6. Contract, valuation and pass-through analysis
Three common structures
A. Pure-agent disbursementClient is liable to authority; supplier pays on client's behalf; exact amount is separately recovered and Rule 33 is satisfied.
B. Supplier's own costSupplier is legally/contractually liable and incurs the payment in supplying its own service. The amount may form part of taxable value where applicable.
C. Bundled considerationSupplier charges one combined price for its service plus statutory/regulatory activity. Section 15 and composite-supply principles may become relevant.
Contract clauses finance teams should review
- Who bears the statutory fee?
- Who is named as applicant/licence holder?
- Who receives the statutory service?
- Is payment made “on behalf of” the customer?
- Is exact recovery promised?
- Is a handling/convenience fee charged?
- Are statutory payments separately disclosed?
- Who bears penalties arising from late/non-compliance?
7. Industry applications
| Industry | Typical government/regulatory payments | Primary review |
|---|---|---|
| Construction / EPC | Plan approval, permits, inspection, authority charges | Pure agent vs contract consideration. |
| Mining | Permits, statutory levies, royalties, approvals | Classify each levy independently; do not group all government payments. |
| Manufacturing | Factory, pollution, fire, calibration fees | Authority service vs private compliance service. |
| Pharma | Drug licences, regulatory filings | Separate statutory fee from regulatory consultancy. |
| Corporate compliance | ROC filings, registration fees | Classic Rule 33 area. |
| Logistics | Port, airport, customs and authority charges | Identify actual authority service and any RCM/taxable component. |
| Real estate | Registration, stamp duty, approval/development charges | Separate statutory levy from taxable developer/service consideration. |
| Transport | Permit and road-related statutory payments | Separate statutory levy from transport/agency service. |
8. ITC on statutory fees and related services
Where the statutory payment itself does not contain GST, there is no GST component on that payment to claim as ITC. The separate professional, consultancy, filing, documentation or facilitation service may contain GST and should be tested under Section 16 and the applicable restrictions.
Statutory fee without GSTNo GST component = no GST ITC on the fee itself.
Consultant fee with GSTTest Section 16 and business-use requirements.
Wrong GST chargedDo not assume eligibility merely because GST appears on an invoice.
Common useWhere GST-bearing services support taxable/exempt activities, consider applicable allocation/reversal rules.
Blocked/ineligible useApply Section 17 restrictions where relevant.
DocumentationKeep statutory receipt and taxable service invoice separately.
9. GSTR-1, GSTR-3B and GSTR-2B
Supplier side
- Identify taxable professional/service consideration.
- Separately document any Rule 33 exclusion.
- Do not report a pure-agent disbursement as taxable turnover merely because it passed through the bank account.
- Reconcile taxable invoice values with GSTR-1 and GSTR-3B.
Recipient side
- Separate statutory payment from GST-bearing consultant/vendor service.
- Match eligible GST invoices with GSTR-2B.
- Investigate invoices where GST appears to have been charged on an amount that should have been a pure-agent disbursement.
10. Reconciliation workflow
Contract→Authority receipt→Supplier invoice→Books→GSTR-1 / 3B→GSTR-2B→ITC decision
| Control | What to match | Common exception |
|---|---|---|
| Authority receipt | Receipt number, applicant, amount, date | Wrong client / duplicate receipt. |
| Contract | Legal liability and recovery clause | Supplier liable but calling it reimbursement. |
| Recovery | Actual authority amount | Markup or unexplained difference. |
| Invoice | Separate disclosure | Combined amount with no split. |
| GST | Tax charged only on taxable service | GST incorrectly charged on disbursement. |
| Portal | GSTR-1/2B/3B | Missing or duplicate invoice. |
For invoice-level Purchase Register vs GSTR-2B checks, use the GST Reconciliation Tool and retain the separate legal classification memo for government-fee recoveries.
11. Decision matrix
| Fact pattern | Initial treatment direction | Critical evidence |
|---|---|---|
| Client's statutory fee paid exactly by consultant | Test Rule 33 pure-agent exclusion | Authority liability, authorisation, receipt, separate recovery. |
| Consultant adds handling fee | Analyse handling fee as own service consideration | Invoice and contract. |
| Supplier's own statutory liability | Do not assume pure-agent exclusion | Law/contract establishing liability. |
| Government service specifically exempt | Apply exact exemption entry | Supplier, service description and conditions. |
| Government service to business | Check taxable/RCM/exemption position | Exact service and notification entry. |
| Penalty or late fee | Identify statutory character | Order/challan/legal basis. |
| Stamp duty/registration levy | Separate statutory levy from taxable professional service | Government receipt and consultant invoice. |
| Bundled statutory charge | Review Section 15/composite supply | Contract and pricing structure. |
12. Practical scenario library
146 practical scenarios are included so finance teams can compare the legal structure of recurring government-fee payments against their actual contracts and invoices.
| # | Situation | Facts | Review direction |
|---|---|---|---|
| 1 | ROC incorporation fee | Company formation provider pays ROC registration fee on behalf of client | Test Rule 33: client is liable, authorises payment, fee is separately disclosed, exact amount recovered, and provider does not use the statutory service for its own account. |
| 2 | ROC name approval fee | Professional firm pays name approval fee and recovers exact amount | Classic pure-agent fact pattern when all Rule 33 conditions are satisfied. |
| 3 | Trademark government fee | IP consultant pays official filing fee for client | Separate professional fee from statutory filing fee; test pure-agent conditions. |
| 4 | Patent filing fee | Patent agent recovers official filing fee | Document client liability, authorisation, exact recovery and separate invoice disclosure. |
| 5 | Factory licence fee | Consultant pays factory licence fee for client | Check whether the client is legally liable and whether the consultant merely facilitates payment. |
| 6 | Pollution consent fee | Environmental consultant pays statutory consent fee | Keep statutory fee separate from taxable consultancy/service fee. |
| 7 | Fire licence fee | Facility consultant pays fire licence fee | Check whether the fee is a government statutory service and whether Rule 33 conditions are met. |
| 8 | Municipal licence fee | Business pays municipal trade licence through consultant | Separate municipal statutory payment from the consultant's taxable service. |
| 9 | Professional tax registration fee | Agent pays registration fee for employer | Analyse statutory fee and agency service independently. |
| 10 | Weights and Measures fee | Vendor pays calibration/verification fee imposed by authority | Identify whether the charge is statutory authority fee or a private testing service. |
| 11 | Building permission fee | Developer recovers municipal approval fee from customer | Check contract, legal liability and whether the developer is principal or pure agent. |
| 12 | Development charges | Developer recovers authority development/infrastructure charge | Determine whether the amount is statutory pass-through or part of the developer's own consideration. |
| 13 | Land conversion fee | Project consultant recovers land conversion fee | Test Rule 33 and identify who is legally liable to the authority. |
| 14 | Government inspection fee | Consultant pays inspection fee on client's behalf | Separate inspection service/fee from consultancy and preserve authority receipt. |
| 15 | Certification fee | Agency pays statutory certification fee | Determine whether certification is supplied by government authority or private agency. |
| 16 | Tender application fee | Contractor pays tender fee and later recovers it | Check whether the client is liable and whether the recovery is merely disbursement. |
| 17 | Tender document fee | Bid consultant recovers tender document cost | Test pure-agent conditions and contract wording. |
| 18 | EMD | Contractor deposits earnest money with authority | Genuine refundable security/deposit needs separate analysis from consideration. |
| 19 | Security deposit forfeiture | Authority forfeits bid security | Distinguish forfeiture/penalty from payment for a service; document legal basis. |
| 20 | Performance security | Contractor deposits performance security | Normally analyse as security rather than service consideration; review any forfeiture separately. |
| 21 | Licence renewal fee | Consultant pays annual licence renewal fee | Separate statutory fee from recurring professional service fee. |
| 22 | Mining lease fee | Mining operator pays government lease-related amount | Identify the legal nature of the government charge and any separate taxable facilitation/service. |
| 23 | Mining royalty | Mining entity pays royalty under statutory framework | Royalty has its own GST treatment and should not be assumed to be a mere statutory reimbursement; analyse separately. |
| 24 | Stamp duty | Property buyer pays stamp duty | Stamp duty is outside GST as a statutory levy; do not treat it as GST on a service. |
| 25 | Registration charges | Property buyer pays registration fee | Separate statutory registration charge from any taxable documentation or brokerage service. |
| 26 | Court fee | Law firm pays court fee for client | Test Rule 33 where client is liable and all conditions are met. |
| 27 | Tribunal fee | Professional pays tribunal filing fee | Maintain filing receipt and separate professional fee. |
| 28 | Arbitration institution fee | Consultant pays institutional fee for client | Determine whether the third-party service contract is with the client and whether Rule 33 applies. |
| 29 | Government portal fee | Service provider pays portal fee on client's behalf | Portal receipt and exact recovery are key controls. |
| 30 | Government certificate fee | Agent obtains certificate for client | Separate official certificate fee from agent's service fee. |
| 31 | RTI application fee | Consultant pays RTI fee for client | Test pure-agent conditions; do not assume all government payments are exempt merely because paid to government. |
| 32 | Passport-related fee | Travel/document agent recovers official fee | Identify actual recipient and statutory liability; separate agency fee. |
| 33 | Visa-related government fee | Consultant pays foreign authority fee | Rule 33 may apply only if statutory conditions are met; also consider foreign tax/fee nature. |
| 34 | Customs statutory payment | CHA pays customs-related amount for importer | Separate customs duty/statutory levy from CHA's taxable service and other reimbursable charges. |
| 35 | Port authority fee | Logistics provider pays port authority charge | Identify whether fee is statutory port charge or taxable port service and whether the provider is pure agent. |
| 36 | Airport authority charge | Operator recovers authority charge from customer | Analyse exact charge, authority, contract and pure-agent conditions. |
| 37 | Railway authority fee | Contractor pays railway permission fee | Separate statutory permission fee from contractor's own service consideration. |
| 38 | Road authority fee | Project consultant pays statutory road permission fee | Check who is liable to authority and retain receipt. |
| 39 | NHAI-related charge | Contractor recovers statutory authority payment | Do not assume every NHAI-related amount is exempt; classify the actual payment. |
| 40 | Municipal property tax | Tenant reimburses property-related statutory levy | Analyse lease contract and whether the amount is part of taxable renting consideration or a qualifying pure-agent payment. |
| 41 | Property tax paid by landlord | Landlord bears property tax and factors it into rent | Section 15 valuation and contractual consideration must be reviewed. |
| 42 | Water/sewerage statutory charge | Landlord recovers authority water/sewer charge | Separate utility/statutory charge from taxable maintenance/rent and test the relevant exemption/pure-agent conditions. |
| 43 | Local body sanitation fee | Facility manager recovers municipal sanitation fee | Check whether the manager is merely disbursing the amount or supplying a bundled facility service. |
| 44 | Environmental compensation | Authority imposes environmental compensation | Determine whether it is a statutory levy/penalty rather than consideration for a supply. |
| 45 | Pollution penalty | Business pays pollution penalty | A penalty is not automatically consideration for a service; classify according to the underlying legal instrument. |
| 46 | Regulatory penalty | Regulator imposes monetary penalty | Keep penalty accounting separate from taxable service consideration. |
| 47 | Late filing statutory fee | Company pays late filing fee to government | Statutory late fee should not be converted into taxable consideration simply because a consultant pays it. |
| 48 | Consultant late fee recovery | Consultant pays client's late fee and recovers it | Check pure-agent conditions and whether consultant's own negligence/contractual obligation changes the analysis. |
| 49 | Professional handling fee | Consultant adds handling fee to statutory fee | Handling fee is a separate consideration and requires GST analysis. |
| 50 | Convenience fee | Agent charges convenience fee for paying government fee | Separate fee from statutory payment; pure-agent exclusion does not automatically cover the convenience fee. |
| 51 | Documentation fee | Consultant charges document processing fee plus government fee | Tax the consultancy/documentation service according to its own classification. |
| 52 | Courier fee | Consultant recovers courier cost with statutory filing | Courier may be a third-party service; test pure-agent conditions or include it in taxable value as appropriate. |
| 53 | Notary fee | Professional pays notarial fee | Identify whether notary service is actually supplied by the professional or by third-party notary and apply Rule 33 only where conditions are met. |
| 54 | Registration agent fee | Agent charges service fee plus registration fee | Separate agent service from statutory fee. |
| 55 | Government tender consultant | Consultant handles tender registration and charges service fee | Tender fee can be separately tested while consultancy remains taxable as applicable. |
| 56 | Licence application service | Agency prepares licence application and pays fee | Application preparation is the agency's own service; statutory fee is separately tested. |
| 57 | Inspection coordination | Consultant coordinates government inspection | Coordination/consultancy is distinct from the statutory inspection fee. |
| 58 | Testing by government lab | Factory pays government laboratory testing fee | Check the exact service and applicable exemption entry; government origin alone does not answer GST. |
| 59 | Private lab testing | Factory pays private lab testing fee | Private laboratory service is not automatically covered by government-service exemptions. |
| 60 | Government certification to business | Authority provides statutory registration/certification to business | Check the specific exemption entry; not every government service is exempt to business entities. |
| 61 | Government service to individual | Individual receives a statutory service | Check the specific exemption rather than applying business-recipient rules. |
| 62 | Small-value government service | Government service consideration is below the applicable threshold | Check the conditions and exclusions in the exemption notification. |
| 63 | Continuous government service | Government service is supplied continuously | Apply the specific continuous-supply condition in the relevant exemption entry. |
| 64 | Government renting | Government rents immovable property to business | Do not assume general government-service exemption covers renting of immovable property. |
| 65 | Government transport | Government provides transport service | Apply the specific transport exemption/rate rules, not a blanket government exemption. |
| 66 | Postal service | Business uses taxable postal service | Department of Posts exclusions mean the normal government-service exemption analysis cannot simply be applied. |
| 67 | Port/airport service | Government/authority provides service relating to aircraft or vessel | Check the specific exclusion from general government-service exemption. |
| 68 | Government goods transport | Government transports goods | Check specific exclusion and applicable tax/RCM framework. |
| 69 | Government legal service | Business receives legal service from government authority | Determine whether it falls under a notified reverse-charge category or exemption. |
| 70 | Government renting to business | Business rents property from government | Review specific renting provisions and RCM where applicable. |
| 71 | Government consulting service | Business receives consulting service from government | Government-to-business services may be taxable unless a specific exemption applies; check RCM where notified. |
| 72 | Local authority service | Business receives municipal service | Identify the exact function/service and exemption entry. |
| 73 | Municipality Article 243W function | Service relates to a municipal constitutional function | Check Notification 12/2017-CTR and applicable conditions. |
| 74 | Panchayat Article 243G function | Service relates to Panchayat function | Check the specific exemption and recipient/supplier conditions. |
| 75 | Pure services to government | Private supplier provides pure service to government | Exemption under the relevant notification may apply only when the specified constitutional-function conditions are satisfied. |
| 76 | Composite service to government | Supplier provides goods plus services to government | Check the 25% goods-value condition for relevant composite-supply exemption entries. |
| 77 | Facility management to government | Agency provides housekeeping/maintenance to government office | Do not assume municipal-function exemption; current CBIC clarification says ordinary office facility management may remain taxable. |
| 78 | Government corporation | Service is supplied by a government company | Government company is not automatically the same as Central/State Government for every exemption. |
| 79 | Statutory authority | Charge is imposed by an authority created under law | Identify whether the authority falls within the exact statutory definition relevant to the exemption. |
| 80 | Government-owned company | Public-sector company charges fee | Ownership alone does not establish exemption; classify the actual supplier and service. |
| 81 | Regulatory body fee | Industry regulator charges registration fee | Check specific exemption and whether it is statutory registration/certification. |
| 82 | SEBI-related fee | Entity pays securities-market regulatory fee | Separate statutory regulator fee from taxable professional/consulting charges. |
| 83 | RBI-related fee | Entity pays regulatory charge to RBI | Check exact service and exemption/RCM provisions. |
| 84 | IRDAI-related fee | Insurer pays regulatory fee | Treat statutory regulator payment separately from consultant services. |
| 85 | GST registration fee | No government fee for GST registration | Do not create a reimbursement or taxable government fee where no such payment exists. |
| 86 | GST appeal fee | Taxpayer pays appeal-related statutory fee | Separate statutory payment from professional representation fee. |
| 87 | GST late fee | Taxpayer pays statutory late fee | Keep it separate from consultant service fee and analyse its statutory character. |
| 88 | GST interest | Taxpayer pays statutory GST interest | Interest is a statutory payment; it is not consideration for a consultant's service. |
| 89 | DRC-03 payment | Taxpayer makes tax payment through DRC-03 | Tax payment itself is not a consultant's taxable consideration. |
| 90 | Consultant tax payment | Consultant pays client's GST liability and recovers it | Payment of client's tax does not automatically satisfy pure-agent conditions; examine contract, liability and recovery structure. |
| 91 | Electricity duty | Business pays state electricity duty | Statutory levy should be separately identified from electricity supply and other utility services. |
| 92 | Motor vehicle registration fee | Fleet operator pays registration fee | Statutory fee is separate from vehicle dealer/service-provider charges. |
| 93 | Road tax | Fleet operator pays road tax | Statutory levy should not be confused with taxable transport/agency charges. |
| 94 | Permit fee | Transport operator pays permit fee | Separate permit fee from transport service and test any reimbursement. |
| 95 | Environmental permit | Project consultant pays environmental permission fee | Retain authority receipt and test Rule 33. |
| 96 | Forest permit fee | Contractor pays forest permission fee | Identify legal liability and pure-agent conditions. |
| 97 | Labour welfare registration | Employer's consultant pays registration fee | Separate statutory fee from HR/compliance service. |
| 98 | Factory inspection fee | Factory consultant pays inspection fee | Keep statutory inspection receipt and consultant invoice separately. |
| 99 | Fire NOC fee | Facility consultant pays authority fee | Separate authority fee from consultancy/coordination service. |
| 100 | Trade licence renewal | Compliance consultant pays renewal fee | Test pure-agent conditions and actual recovery. |
| 101 | Food licence fee | Food business pays statutory licence fee through consultant | Separate statutory fee from FSSAI/compliance consulting service. |
| 102 | Drug licence fee | Pharma company pays statutory licence fee through consultant | Separate official fee from regulatory consulting. |
| 103 | Professional licence fee | Professional entity pays licence renewal through agent | Review statutory liability and pure-agent conditions. |
| 104 | Government auction fee | Buyer pays authority auction fee | Identify whether fee is consideration for an authority service or a statutory charge and apply exact exemption/rate. |
| 105 | Auction facilitation fee | Private platform charges facilitation fee plus government fee | Facilitation fee is separate taxable consideration. |
| 106 | Property authority charges | Developer pays authority scrutiny charges | Retain authority challan and determine whether charge is recovered as pure agent or embedded in development service. |
| 107 | Plan approval fee | Architect pays municipal plan approval fee for client | Separate architecture service from approval fee; test Rule 33. |
| 108 | Inspection travel cost | Consultant recovers travel cost for statutory inspection | Travel may be part of the consultant's own service value unless a true pure-agent structure exists. |
| 109 | Statutory publication fee | Agent pays government publication fee | Separate statutory publication fee from agent service. |
| 110 | Gazette publication fee | Consultant recovers official Gazette fee | Test actual third-party payment and client liability. |
| 111 | Name change approval fee | Consultant pays official approval fee | Separate professional service and statutory fee. |
| 112 | Change in registered office fee | Company secretary recovers statutory filing fee | Classic Rule 33 analysis where conditions are satisfied. |
| 113 | Director filing fee | Professional pays statutory filing fee | Keep statutory receipt and exact recovery evidence. |
| 114 | Annual filing fee | Compliance provider recovers annual statutory filing fee | Separate filing service from statutory fee. |
| 115 | Regulatory renewal package | Consultant charges one bundled annual amount including fees | Bundling can make pure-agent exclusion difficult unless the statutory amount is separately identifiable and conditions are met. |
| 116 | No separate disclosure | Invoice shows one combined amount including statutory fee | Pure-agent exclusion requires separate indication; review invoice structure. |
| 117 | Exact recovery | Supplier recovers exactly the authority receipt amount | Supports Rule 33 but all other conditions must also be satisfied. |
| 118 | Recovery below actual | Supplier absorbs part of statutory fee | The amount recovered cannot simply be treated as pure-agent expenditure without analysing the commercial arrangement. |
| 119 | Recovery above actual | Supplier recovers more than authority fee | Excess amount requires separate GST/value analysis. |
| 120 | Advance statutory fee | Client advances money to consultant for government payment | Track advance separately and settle against authority receipt. |
| 121 | Unused advance refund | Consultant returns unused government-fee advance | Maintain client ledger and refund trail. |
| 122 | Government fee paid from client account | Consultant has authorised access to client funds | Bank mechanism alone does not determine pure-agent status; contractual/statutory conditions still matter. |
| 123 | Government fee paid from consultant account | Consultant pays first and recovers later | This is common pure-agent fact pattern but must satisfy every Rule 33 condition. |
| 124 | Tax invoice vs receipt | Authority issues only a challan/receipt | Retain the statutory receipt; do not invent a GST tax invoice where none is issued. |
| 125 | GST charged on consultant fee | Consultant charges GST on professional fee plus separately shown statutory fee | Review whether statutory fee qualifies for exclusion and tax the professional fee appropriately. |
| 126 | Wrongly taxed reimbursement | Supplier charged GST on pure-agent statutory fee | Review whether correction/credit note and return adjustment are required based on facts and applicable provisions. |
| 127 | ITC on statutory fee | Recipient asks for ITC on government fee | If the statutory fee itself has no GST component, there is no GST amount to claim; separately assess GST on professional service. |
| 128 | ITC on consultant fee | Recipient pays GST on compliance consultant fee | Assess Section 16 eligibility and any business-use/restriction issues. |
| 129 | GSTR-2B mismatch | Consultant invoice is missing from GSTR-2B | Reconcile supplier reporting and document follow-up. |
| 130 | Duplicate statutory recovery | Same government fee recovered twice | Match authority receipt number, date and client ledger. |
| 131 | Wrong authority receipt | Receipt belongs to another client | Treat as documentation exception and correct before closing the tax file. |
| 132 | Year-end statutory accrual | Government fee is incurred but receipt arrives later | Account for accrual separately and reconcile final statutory payment/receipt. |
| 133 | Project cost recovery | Contractor recovers statutory permission fees from project owner | Determine whether the fee is pure-agent disbursement or part of contract consideration. |
| 134 | Works contract statutory fee | Contractor pays permit fee as part of works contract | Contract terms and supply structure determine whether it is a separate disbursement or contract cost. |
| 135 | EPC authority fee | EPC contractor recovers approval charges | Test Rule 33 and composite-supply treatment. |
| 136 | Mining statutory fee recovery | Mining contractor recovers permit/authority charge | Separate statutory payment from mining service/contract consideration. |
| 137 | Road project statutory charge | Road contractor recovers authority permission fee | Maintain authority challan and contract clause. |
| 138 | Construction plan approval | Builder pays plan approval charge | Do not automatically exclude from taxable property/service consideration; identify who is liable and the contractual role. |
| 139 | Customer-specific government fee | Fee is legally payable only by customer | Strong fact supporting pure-agent analysis, subject to all Rule 33 conditions. |
| 140 | Supplier-specific government fee | Fee is legally payable by service provider | It is less likely to qualify as a pure-agent exclusion; analyse whether it forms part of the supplier's own cost/value. |
| 141 | Statutory levy embedded in price | Contract says all statutory charges are included | Embedded charges may form part of taxable consideration; contract and Section 15 analysis are critical. |
| 142 | Tax-exclusive statutory reimbursement | Contract separately states statutory fees plus GST on service fee | This supports clear separation but still requires Rule 33 compliance. |
| 143 | Tax-inclusive recovery | One all-inclusive fee covers service and government fees | Pure-agent exclusion is difficult to substantiate without separate identification and contractual support. |
| 144 | Audit query on pure agent | Tax officer asks why reimbursement excluded | Provide contract, authority liability, authorisation, receipt, invoice disclosure and exact recovery calculation. |
| 145 | Internal tax memo | Finance prepares annual position on government reimbursements | Record each recurring charge category, legal basis, supplier, recipient, tax treatment and supporting evidence. |
| 146 | Final monthly control | Tax team closes government-fee recoveries | Reconcile contract → authority receipt → recovery invoice → books → GST return → ITC and exception log. |
13. Audit checklist
Statutory payment file
Authority identified
Exact charge identified
Legal liability documented
Authority receipt retained
Payment date verified
Applicant/recipient verified
Pure-agent file
Contract authorises payment
Recipient liable to third party
Third-party service is for recipient
Separate invoice disclosure
Exact amount recovered
No hidden markup
GST file
Exemption entry checked
RCM checked
Taxable service identified
Section 15 reviewed
ITC eligibility reviewed
GSTR-1/3B/2B reconciled
14. Frequently asked questions
Are all government fees exempt from GST?
No. CBIC expressly states that not all government/local-authority services are exempt. The exact service, supplier and applicable notification entry must be checked.
If a consultant pays a government fee, can it always be excluded from taxable value?
No. Rule 33 requires all prescribed pure-agent conditions to be satisfied.
Is the word “reimbursement” enough?
No. GST treatment follows the substance and statutory conditions, not merely the invoice label.
Can a consultant charge GST on its professional fee while recovering a statutory fee?
Yes, where the professional service is taxable; the statutory fee may separately qualify for pure-agent exclusion if the conditions are met.
Can ITC be claimed on a statutory government fee?
Where the fee itself contains no GST, there is no GST amount to claim. GST-bearing professional or regulatory services require a separate ITC analysis.
Does a government-owned company automatically qualify as Government?
No. Supplier identity and the exact statutory definition relevant to the exemption must be checked.
What documents should be kept?
Contract, authority receipt/challan, authorisation, supplier invoice, exact recovery calculation, accounting entry, payment evidence and GST return/reconciliation records.
Related GST resources
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