Service tax on reimbursement

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 April 2015 Dear expert
please tell me whether service tax is applicable on reimbursement of stationery & courier incurred by service provider..

please reply..

CA John Abraham Austin ACA

CA John Abraham Austin ACA (Expert)
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06 April 2015 Yes. Service Tax is applicable even on reimbursement too.It is a practical difficult created by the Dept.

Querist : Anonymous

Querist : Anonymous (Querist)

07 April 2015 Dear sir
but many tax expert had said no service is to be applicable on the reimbursement of expenses incurred by SP...

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CA John Abraham Austin ACA

CA John Abraham Austin ACA (Expert)
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07 April 2015 However, the guide provided by the CBDT on 20.06.2012 on the Selective Approach of Service Tax says so. Please refer it.

Querist : Anonymous

Querist : Anonymous (Querist)

10 April 2015 Dear sir
can you provide me any cases related to charging ST on reimbursement on expenses. actually i have been confused about charging ST on reimbursement. some expert are saying no need to charge ST on reimbursement of exp. and some are saying you need to charge ST on reimbursement of exp.

please clarify it.

CA John Abraham Austin ACA

CA John Abraham Austin ACA (Expert)
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10 April 2015 Sercon India (P.) Ltd. Vs. Commissioner (Adjudication) Service Tax

[(2013) 32-taxmann-390 (Delhi)]

CA John Abraham Austin ACA

CA John Abraham Austin ACA (Expert)
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10 April 2015 Chargeability of service tax on reimbursement of expenses

As per section 67 of the Finance Act, 1994, gross amount charged by the service provider for such service provided or to be provided by him shall be considered as the value of taxable services on which the service tax shall be charged. No other amounts shall be included for such consideration to be charged to service tax. Earlier, we showed service tax on small service provider exemptions

There can be some cases when service provider incurs some expenses on his own for providing his services. Generally, these expenses are known to be out of pocket expenses. Such expenses can be of any nature in relation to the services provided or to be provided.

As per Rule 5(1) of the service tax rules, 2006, in case the service provider incurs any amounts or expenditures for providing such services, all such amounts and expenditures shall form part of the consideration for such services and thus shall be included in the value for the purpose of charging service tax on reimbursement of expenses

According to this rule, any amount paid for reimbursement of expenses incurred by the service provider, whether forming part of the total consideration or charged separately, shall be charged to the service tax.

Since these kinds of reimbursements are actually not the payment for his services but amounts incurred otherwise, this had been a discussing issue. In December, 2012, Delhi High Court held that reimbursements of out of pocket expenses incurred by the service provider are not subject to levy of service tax and Rule 5(1) is considered invalid in such respect. Thus provisions of charging service tax on reimbursement of expenses hold invalid after the decision.

Read more: http://taxpaisa.com/service-tax-reimbursement-expenses/#ixzz3Wto2am00

CA John Abraham Austin ACA

CA John Abraham Austin ACA (Expert)
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Querist : Anonymous

Querist : Anonymous (Querist)

10 April 2015 DEAR JOHN SIR
MY CA HAS ADVISED ME IF I ISSUE THE SEPARATE BILL FOR REIMBURSEMENT OF EXPENSES THEN NO NEED TO CHARGE ST ON REIMBURSEMENT OF EXPENSES. ARE YOU AGREE WITH IT.

CA John Abraham Austin ACA

CA John Abraham Austin ACA (Expert)
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10 April 2015 Well, its a debatable issue.
According to me, you should charge.

Querist : Anonymous

Querist : Anonymous (Querist)

13 April 2015 Dear john sir
i have a Query plz guide me on this..

if my debtors has Tin. no. and i am going to issue the bill of sale to my debtors. please let me know which invoice i will issue to him whether sale invoice or tax invoice...

CA John Abraham Austin ACA

CA John Abraham Austin ACA (Expert)
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13 April 2015 Obviously, Tax Invoice.

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Querist : Anonymous

Querist : Anonymous (Querist)

13 April 2015 actually in my opinion also if the customer has tin no. then tax invoice is to be issue but the CA ankit bohra has replied that we can issue the sale invoice also...

CA John Abraham Austin ACA

CA John Abraham Austin ACA (Expert)
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13 April 2015 The thing is, when a sale transaction involves tax, then we should use Tax Invoice only whether it is Service or Sales.