08 February 2011
If a bill contains 1.)Advocates consultancy fees Rs. 50000 2.)Reimbursement of the expenses(paid to the govt. on behalf of the customer) Rs. 5000 3.)Reimbursement of the expenses[paid for freight(Transporter having PAN) on behalf of the customer] Rs. 25000 TOTAL Rs.80000/-
TELL ME THE TDS COMPLIANCE.
BUT SIR WHAT ABOUT THE LEGAL EXPENSES PAID TO THE GOVT. ON BEHALF OF US. WOULD THEY ALSO BE LIABLE FOR THE TDS?
08 February 2011
TDS to be deducted on total bill amount u/s 194J as you will book the entire amount as professional fees/Consultancy fees. Payment to transporter was not made by you. So that part wont fall under your consideration.
08 February 2011
Fee paid to the advocate will cover under Fee for technical and consultancy serice and TDS required to be deducted @ 10 % on such payment.
But as far as re imbursement of expense to the govt, there is not required to deduct TDS since the provision contemplate any Fee by whatever name called which is payable to the advocate. As such re imbursement of expense will not be construed as a Professional fee and hence no TDS should be deducted on such payment.
09 February 2011
In my view, since it is a consolidated bill TDS should be deducted on total bill amount. If separate bills are provided for professional fees and reimbursement of expenditure TDS should be deducted only on Bill of professional fees.
Citation: The Delhi Bench of the Income Tax Appellate Tribunal in ITO Vs Dr. William Schwabe India (P) Ltd.[2005]3 SOT 71 examined the scope of Circular No. 715, dated August 8, 1995 on the subject of deduction of Tax At Source on expenses reimbursement and upon perusal of the same, it held that reimbursement of expenses for which bills is separately raised did not attract the provision of sec 194J
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