Service tax on reimbursement

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

11 January 2016 Hi,

My client is CHA and he pays reimbursement expense like custom duty, shipping charges etc. on behalf of client and charge the same amount to his client.

Whether that amount is liable for service tax levy?

thanks

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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11 January 2016 Service Tax has to be charged on reimbursement of expenses also.

IN the Finance Bill 2015, the Explanation to Section 67 - Clause (a) has been substituted. As per the new amendment, all reimbursement expenses incurred by the service provider, have to be included in the consideration.

The amendment is as below:

'(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) ............................................'

Ashish Chaudhary

Ashish Chaudhary (Expert)
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14 January 2016 Amount recovered by CHA towards these charges is generally on pure agent basis (where actual amount is recovered without any mark up) and hence may not be liable to service tax under amended definition also. However, if not recovered in the capacity of pure agent, TS would liable.

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