Rinky Senger (_) (205 Points)
04 February 2016
CA Mehul Chudasama
(Chartered Accountant)
(618 Points)
Replied 04 February 2016
Since Reimbursement of Expenses Show By Pure Agent only Deducted So Service Tax To Be Charged On Toal Amount And TDS is to be deducted on Total Amount Excluding Service Tax if Service Tax Amount Seprately Shown In Bill Raised By Auditor
I Don't Thhink So Auditor Acting As Pure Agent for Client.
Rinky Senger
(_)
(205 Points)
Replied 05 February 2016
can you brief the statement "Reimbursement of Expenses Show By Pure Agent only Deducted".
I am not able to interpret it.
CA Mehul Chudasama
(Chartered Accountant)
(618 Points)
Replied 05 February 2016
As per Rule 5 of Determination of Value for Service Tax Rules, 2006, 'pure agent' means the person who procures services on behalf of his client, while providing his own taxable service. In other words, he is the mediator between some service provider and his client. The value of such service procured on behalf of client is excludable from taxable value for payment of service tax, if and only if (i) that service provider charges the client directly, (ii) pure agent does not holds right of such services (iii) pure agent receives the actual amount of such service from the client
ankush
(none)
(102 Points)
Replied 08 February 2016
sir since there is chage in definitinon of service consideration how to differentiat between pure agent and reimbursement which is becomes part of service charges as per new definition of valuation rules
Rinky Senger
(_)
(205 Points)
Replied 09 February 2016
Reimbursement of expenses claimed by service provider (other than a pure agent of service recepient) shall be treated as consideration of the service.
Differentiation is possible by examining the relationship between service provider(say A) and service recpient(say B). If there is an pure agent(say C) in between, the taxable value of service for service provider(i.e. A) will be total amount inclusive of expenses claim for reimbursement. And the pure agent(i.e. C) will issue his own bill to the service receiver(i.e. B) excluding the reimbursement of expenses(on satisfaction of the conditions in sub-rule 2 of Rule 5 of Determination of Value Rules 2006) to service receiver(i.e. B).
CA Mehul Chudasama
(Chartered Accountant)
(618 Points)
Replied 09 February 2016
For Example A Custom House Agent Paid Custom Duty of Rs.300000 on behalf of his client and the same was included in his fees Of Rs.1000000 then In this case Value of Taxable Service Provided Is Rs.700000 Because Custom House Agent Is Treated As Pure Agent His Only Charge What He Pay Necessary To Custom Department If He Will Charge Rs 4,00,000 as Custom Then He Will Not Treat As Pure Agent
In You Case May Be Auditor Taking Reimbursement of Expense As Conveyance, Lunch Expense And Any Other Thing in all this case he can not be treated as pure Agent becuase this services is required to perform his basic services which is common he is not specifically incurred for the client seprately
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