Our Firm is registering a company of some Clients who are often out of country.

They have paid us our Professional fees. (Incl. of Service Tax) in advance and

Since they are often out of country they are individually depositing with us a certain amount by cheque to meet some of their business expenses, with an approval to spend the same.

We Plan to issue 2 separate receipts (Cheque is drawn favoring of our proprietary Firm):

1.             Receipt for Professional Fees incl. of service Tax.

2.             Deposit Receipt – stating that Rs. so and so are deposited with us by you to reimburse, incur and meet your business Expenses. The deposit shall be without any interest. We shall refund the balance amount, if any left with us OR shall claim if we spend something in excess. We shall maintain a/c’s of all the expenditures or money spent from the said deposit.

Is it Ok?

Will there be any Income Tax or Service Tax issues on us?

Is Service tax to be charged on the deposit amount also?

After spending this money Should we handover all the original receipts and a/c’s to them & preserve just photo copy and their acknowledgement?