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St on reimbursement of expenses

John Philip (Trade Consultant) (47 Points)

03 July 2012

I am a sevice provider.

I raise invoice for 100% of my service.

Some times i pay statutory charges from y pocket like challan, fees, incidental expenses.

before 01.07.2012 this was clearly exempted from ST.

Post 01.07.2012 effec of this notification is not clear. whether service tax is applicable on reimbursement of expenses. Please advice.

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3 Replies

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 03 July 2012

As per Rule 5(2) 0f Service Tax (Determination of Value) Rules, 2006, the amount of expenditure claimed as reimbursements by acting as a pure agent is excluded from the Value of the service. So, you should move ahead with the earlier practice.

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CA. Jiya (Sr. Executive) (64 Points)
Replied 03 July 2012

Dear Ajit..

What if the Person not acting as pure agent....?

i mean......

our organisation is having some milk socities... and these socities conduct some devlopment programe...

bill is raised in our organisation's name... but we get it reimbursed from our marketing agency....

in this case is service tax applicable on reimbursement?

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 03 July 2012

It will not be allowed as exemption from the value of services. It is because of the fact that invoice is not in the name of the service provider. The point of pure agent was earlier also and hence to be applied at present also.