We, a small PR company need some clarity on GST issue when invoicing our clients. We have agreement with our one leading client; billed them the amount as per the estimate PO. Now our Out of Pocket expenses incurred on the project/event work are given to client separately (separate from the project/retainer invoice) with exact bills and we are billing exact amount. On some bills such as stringers, photography, video coverage, food GST was charged, one or two minor bills the vendor themselves doesn’t have GST such as a small car owner whose car we used . Anyway point of all this background stuff, is to ask that say the OPE bill is a certain amount, we have bills to prove, and we are charging that exact amount to the client (actual cost consider principal plus GST what vendor charge & we pay to vendor on behalf of our client) consider vendor bill and we are charging from client vendor bill (including GST) plus 18% GST. Earlier client was paying when service tax applicable, now client refuse to pay vendor GST which we considering as our cost. Do we add 18% GST on the OPE bill?
Our accountant has said we must charge GST & client can claim Input what we have charged GST, our client says we must charge tax on vendor principal amt. excluding gst. What do we do? Also can you tell me the GST law, the provision so I can quote it, as needed to our client? Thanks a lot.
First point, you have to charge GST on invoice issued to your client for reimbursements.
Second, your client is right. You have to charge GST on principal amounts only because you can take credit of GST charged on expenses.
But few expenses on which you cannot take input credit you to charge GST on entire amount.
For example, in your case:
For photography suppose 100 Rs. charged with 18 Rs. GST. So total invoice you received will be for 118 Rs.
You need to charge to your client 100+18. The 18 which you paid to photographer as GST, anyhow you can claim as input credit so it is not an expense for you.
However the expense you incurred on food, you need to charge full amount including GST and charge GST on that, because for food you cannot claim input tax credit.
Hope it solves your concerns.
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