Tds on reimbursement of exp - 194j

This query is : Resolved

Pranay agrawal (Querist)
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17 October 2013 In case of ITO Vs. Dr. Willmar Schwabe India (P) Ltd., it was held that separate invoices needs to be prepared for professional fees and reimbursement and in that case TDS in not required to be deducted on Reimbursement of exp.

In our case, client has bifurcated reimbursement charges in the same invoice and also charged service tax on the total amount including the reimbursement but didn't provide any separate invoice.

So if bifurcating the reimb. exp in the same invoice will attract TDS on total amount or only on professional fees.

Please advice

Thanks

CA Parul Saxena

CA Parul Saxena (Expert)
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17 October 2013 TDS to be deducted only on professional charges amount including service tax thereon.Ask the client not to charge service tax on amount which has been reimbursed.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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17 October 2013 Tds is never to be deducted on reimbursment of exp and must be deducted on professional charges u/s 194J.

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Sanket

Sanket (Expert)
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17 October 2013 Dear Dileep, TDS on reimbursement is not
required to be made if separate bills are raised
one is for professional fee and the other is for
reimbursement of expenditure . If a single bill is
raised for the professional fee inclusive of
reimbursement of expenditure , in such a case
TDS is to be made on gross amount . The
above view is supported by a case law ITO v .
Dr. Willmar Schwabe ( 2005 ) 3 SOT 71 ( ITAT) .
Where as per CBDT circular No . 715 dated
8-8 -1995 , TDS should be on total payment
including reimbursement of expenses . But ITAT
in the above decision it was held that
reimbursement of expenses for which bill is
separately raised did not attract the provisions
of section 194 J, the above circular attracts
only in case bill is raised inclusive of
reimbursement of expenditure . And TDS should
be deducted on the gross amount .