03 January 2014
One of the client is engaged as contractor for mine owner for excavation of mineral ore. During this course incidental expenses are incurred on behalf of the mine owner. Subsequently reimbursement was made by mine owner. Do the reimbursement of expenses attracts Service Tax?
03 January 2014
Yes,these reimbursement are liable to service tax. If the incidental expenses incurred by the contractor were necessary to carry on his excavation activity ,then service tax shall be levied on reimbursement of same .Reference:Rule 5 of Valuation Rules.
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