Master TDS & TCS Provisions with Critical Issues. Register Now!

TDS ON REPAYMENT/REIMBURSEMENT OF EXPENSES

devduttgaur (Sr. Account) (33 Points)

29 December 2009

I want to know about tds liability on reimbursement of expenes that we are doing on behalf of a company. We contractor and making expense on behalf of company, that company reimburement to us. Please tell me Thanks In advance

Reply
Follow
Share

17 Replies

Amir (Learner) (4016 Points)
Replied 29 December 2009

The liability to DEDUCT TDS IS ON THE PERSON MAKING THE PAYMENT IRRESPECTIVE OF THE FACT THAT PAYMENT IS MADE ON BEHALF OF A CLIENT and SUBSEQUENTLY CLIENT WILL REIMBURSE THE EXPENSES...

So my dear, TDS has to be deducted on payments made on behalf of others..

Upgrade to CAclubindia Pro. Subscribe Now!

shailendra (C.A. FINAL) (189 Points)
Replied 29 December 2009

Dear Dev,

TDS will not be deducted on reimbursement of expenses if bill for reimbursement is given seperately. However if there is a composite bill of service charges and reimbursement, then TDS will be deducted on the whole bill amount.

shailendra (C.A. FINAL) (189 Points)
Replied 29 December 2009

I agree with amir sir, but sir TDS is deducted on the actual expenditure incurred and not on the expenditure that has been reimbursed.

It has been clearly mentioned in the V.K. Singhania sir reckoner

krishna iyer (Sr.Finance Manager) (197 Points)
Replied 29 December 2009

I feel TDS is required even for reimbursements for payments comings u/s 194 C. S. 194 C mentions about payments to contractors and do not distinguish actual payment/reimbursements

CA. Anshul Bajaj (Taxation Head) (173 Points)
Replied 29 December 2009

No TDS IS not to be deducted in case reimbursements have been given...but the actual amount of reimb. must be equal to actual expenses incurred...

Correct me if i m wrong

Upgrade to CAclubindia Pro. Subscribe Now!

BIJAY KUMAR RUNGTA (CA FINAL STUDENT) (85 Points)
Replied 29 December 2009

YES,tds liability will be arise but if separate bill for reimbursement of expenses is raised then tds liablity will not impose on reimbursement bii.

Amir (Learner) (4016 Points)
Replied 29 December 2009

Dear Shailender, there are 2 things

1) Reimbursements : - eg:- Out of Pocket expenses in an invoice of a chartered accountant - TDS is to be deducted on out of pocket expenses.

2) Expenses on behalf of others (Which will be claimed as reimbursements as above ):- eg:-Clearing & Forwarding agent makes the payment to Transporter on behalf of client - TDS is to be deducted on this amount also..

Can you please clarify on which subject you are talking that it is clearly mentioned in Singhania's Sir Book.??

1 Like

NARENDER PAWAR (CA final Student) (337 Points)
Replied 30 December 2009

in my opinion tds is not applicable on reimbusshment of exp.

shailendra (C.A. FINAL) (189 Points)
Replied 30 December 2009

Dear Amir sir,

What i think is that there is no distinction between the reimbursement of out of pocket expenses and expenses on behalf of others. Reimbursement is something what you have already incurred and you claim it from the other person. you can't go into the detail of the expenses that is reimbursed.

And its written in the singhania's sir book that reimbursement attract TDS if not given against a seperate bill.

CA Gaurav Jain (Charterted Accountant) (156 Points)
Replied 30 December 2009

I am completely agree with Shailendra what, he has given opinion about tds dedcuted on rembuirshment..

Upgrade to CAclubindia Pro. Subscribe Now!

harish kumar (CA Articleship) (37 Points)
Replied 13 January 2010

Hi, i want to know at what percentage rate TDS should be deducted on Reimbursement of Expenses

Max Payne (employed) (2574 Points)
Replied 13 January 2010

Originally posted by : shailendra
	Dear Amir sir, What i think is that there is no distinction between the reimbursement of out of pocket expenses and expenses on behalf of others. Reimbursement is something what you have already incurred and you claim it from the other person. you can't go into the detail of the expenses that is reimbursed. And its written in the singhania's sir book that reimbursement attract TDS if not given against a seperate bill.

Dear Shailendra, yes u r right TDS need not be made u/s 194J i re-imbursement is claimed in a separate bill - as per the decision in Dr. William Schwabe (I) Pvt Ltd Vs CIT. However there is no such decision for section 194 C

shailendra (C.A. FINAL) (189 Points)
Replied 13 January 2010

Dear Harish,

TDS rate applicable on the expenses reimbursed attract the same rate as the original expenditure does.

CA Ravindra kakani (Propritore) (38 Points)
Replied 01 May 2010

Dear Friends,

In my opinion TDS has to be deducted on reimbursement amount because there is no differentiation between type of expense in the act. And also as per Question no. 30 of circular no. 715 dated 8 Aug 1995, 194J refer to any sum paid obviously, reimbursements cannot be deducted out of the bill amount for the purpose of tax deduction at source.