Sec 67 of st

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

05 May 2016 Dear Experts,
I have read section 67 of ST many time
But i have not seen written any where in this
Said section that ST is applicable on
Reimbursement of expenses.. plz let me know
In this section where it is mention that ST
Is applicable on reimbursement,

Regard
Raj kumar

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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06 May 2016 Dear Raj Kumar,

Finance Act 2015 has amended Explanation (a) to Section 67 vide paragraph 109 of Finanace Bill 2015. The relevant provision is as under:

Amendment of section 67.

109. In section 67 of the 1994 Act, in the Explanation, for clause (a), the following clause shall be substituted, namely:—

‘(a) “consideration” includes–

(i) any amount that is payable for the taxable services provided or to be provided;

(ii) any reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service, except in such circumstances, and subject to such conditions, as may be prescribed;

(iii) any amount retained by the lottery distributor or selling agent from gross sale amount of lottery ticket in addition to the fee or commission, if any, or, as the case may be, the discount received, that is to say, the difference in the face value of lottery ticket and the price at which the distributor or selling agent gets such ticket.’.

Relevant Extract from D.O. Letter from JS(TRU-II)–F. No. 334/5/2015-TRU- D.O.F. No. 334/5/2015-TRU, dated February 28th, 2015

iv) Section 67 prescribes for the valuation of taxable services. It is being prescribed specifically in this section that consideration for a taxable service shall include:

(a) all reimbursable expenditure or cost incurred and charged by the service provider. The intention has always been to include reimbursable expenditure in the value of taxable service. However, in some cases courts have taken a contrary view. Therefore, the intention of legislature is being stated specifically in section 67.

(b) amount retained by the distributor or selling agent of lottery from gross sale amount of lottery ticket, or, as the case may be, the discount received, that is the difference in the face value of lottery ticket and the price at which the distributor or selling agent gets such tickets.

I hope your doubts are now cleared regarding the matter of service tax on reimbursement of expenses.