TDS on Re-imbursement

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Vishal Bharuka (Querist)
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17 June 2008 There is a service provider 'T' which provides services to 'X' for which there is a contract between 'X' & 'T'. 10% of the total service charges are paid by 'Y' to 'T' on behalf of 'X'. 'Y' an independent party to 'X'. 'Y' deducts TDS on the same and deposit to govt. Rest of the 90% is paid by 'X' and TDS deducted accordingly. Later 'X' reimburses 'Y' the gross amount paid by 'Y'. Question is whether this re-imbursement by 'X' to 'Y' would again be liable to TDS. Could you plz substantiate your answer with some decided case laws/circulars. Thanks

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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31 March 2012 TDS is NOT applicable on reimbursement of expenses if the party submits a separate bill for the same.

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