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Service tax on reimbursement

salina khanal (trainee) (25 Points)

11 February 2016

We have to raise our invoice for providing event services to client, broadly they fall into following categories
- Hotel Banquet
- Taxi
- Printing & Stationery
- Bags / Souvenirs /
All the above will be on actual against bills raised by respective organisations on behalf of clients and limited to such event only, there is no additional profit being charged.

In addition, there will project management charges for taking up the assignment

Please advise us on the implication of service tax.

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2 Replies

CMA Poornima Madhava (CMA) (13112 Points)
Replied 11 February 2016

For levy of ST, all the expenditure in connection with taxable service shall be included in the value of consideration. However, if expenditure is incurred by the service provider as a pure agent then no ST is applicable on such expenditure.

Pure agent is a person who:

enters into a contractual agreement with service receiver to act as his pure agent to incur expenditure/costs in the course of providing taxable services
neither intends to hold nor holds any title to goods/services so procured/provided
does not use such goods/services so procured
receives only the actual amount incurred to procure such goods/services

If the above conditions are satisfied, then no need to charge ST on such expenditure incurred.