194j & s.tax--plz plz plhelp me out.......
This query is : Resolved
26 April 2012
Dear All,
My client has received invoices from lawyers fimr towards legal expenses
braek up is as follows
legal charges 1 lacs and out of packet exp 10,000
now my questions:
1) can he sent bill like that with service tax
2) on what amt tds should deduct is it on billamtonly or bill+ out of packet expenses also.....
regards
My client has received invoices from lawyers fimr towards legal expenses
braek up is as follows
legal charges 1 lacs and out of packet exp 10,000
now my questions:
1) can he sent bill like that with service tax
2) on what amt tds should deduct is it on billamtonly or bill+ out of packet expenses also.....
regards
26 April 2012
The firm is charging Rs. 10000 extra. This is not included in Legal Charges. It does not mean that the charge is not legal. Further they have mentioned that Rs. 10000/- is out of pocket expenses. Means the amount have been spent in connection with your case as they thought essential.
It should not be confused with service tax.
Service Tax is levied on (Taxable) Services only.
(Humour- Our Govt thinks that A Laweyer is not providing any services hence on Individual to Individual basis, there is no Service Tax liability ? )
.
TDS to be deducted on 110000/-
.
It should not be confused with service tax.
Service Tax is levied on (Taxable) Services only.
(Humour- Our Govt thinks that A Laweyer is not providing any services hence on Individual to Individual basis, there is no Service Tax liability ? )
.
TDS to be deducted on 110000/-
.
27 April 2012
Dear Sir,
Even out of pocket expenses also are subject to 194J
or only on 100000( invoice amount) should i deduct TDS
Dear Sir,
Even out of pocket expenses also are subject to 194J
or only on 100000( invoice amount) should i deduct TDS
27 April 2012
On a safer side, I will advice to deduct tax on both the amounts. i.e. the Legal charges as well as the amount reimbursed.
27 April 2012
are u sure we should deduct on both bill amount and reimbursment amt as some told reimbirsments expare not subject to TDS ...
are u sure we should deduct on both bill amount and reimbursment amt as some told reimbirsments expare not subject to TDS ...
27 April 2012
Please go through the following. It may clarify your matter:
1. In reply to question no. 30 CBDT circular No. 715 dated 8-8-1995
confirms that TDS on reimbursement is required to be made if a single
bill is raised for the professional fee inclusive of reimbursement of
expenses. In such cases TDS is to be made on gross amount i.e. on the
aggregate amount of professional fee and amount of reimbursement of
expenses.
2. On the other hand, where separate bills are raised for professional fee
and for reimbursement of actual expenses duly supported by expense
bills, whether TDS should be deducted or not on invoice for
reimbursement of expenses. The Delhi bench of the Income Tax
Appellate Tribunal in ITO Vs. Dr. Willmar Schwabe India (P) Ltd. [2005] 3
SOT 71 examined the scope of Circular No.715 dt.8-8-1995 on the
subject of deduction of tax at source on expenses reimbursement and
upon perusal of the same, held that reimbursement of expenses for
which bill is separately raised did not attract the provisions of Section
194J. Accordingly, no TDS is required to be deducted on such
reimbursement of expenses.
1. In reply to question no. 30 CBDT circular No. 715 dated 8-8-1995
confirms that TDS on reimbursement is required to be made if a single
bill is raised for the professional fee inclusive of reimbursement of
expenses. In such cases TDS is to be made on gross amount i.e. on the
aggregate amount of professional fee and amount of reimbursement of
expenses.
2. On the other hand, where separate bills are raised for professional fee
and for reimbursement of actual expenses duly supported by expense
bills, whether TDS should be deducted or not on invoice for
reimbursement of expenses. The Delhi bench of the Income Tax
Appellate Tribunal in ITO Vs. Dr. Willmar Schwabe India (P) Ltd. [2005] 3
SOT 71 examined the scope of Circular No.715 dt.8-8-1995 on the
subject of deduction of tax at source on expenses reimbursement and
upon perusal of the same, held that reimbursement of expenses for
which bill is separately raised did not attract the provisions of Section
194J. Accordingly, no TDS is required to be deducted on such
reimbursement of expenses.
27 April 2012
In case of service tax levy,
As per the Service Tax (Determination of Value) Rules 2006, a reimbursement of expenses shall be liable to be taxed unless the same is incurred by the service provider as a "pure agent" of the service receiver. .
As per Rule 5 of the Rules, the gross amount charged shall include the cost and expenditure incurred in connection with the taxable services charged to the service receiver. .
No deduction is allowed on the reimbursement of expenses unless, once again, these expenses are incurred by the service provider as a pure agent of the service receiver..
“Pure agent” has been defined in Explanation (1) to Rule 5 (2) of Service Tax (Determination of Value) Rules, 2006. .
Please note: The levy of service tax on reimbursements had been challenged in Intercontinental Conslt & Technocrats (P) Ltd v. UOI (2008 (12) STR 689 (Del), and the matter is pending adjudication
As per the Service Tax (Determination of Value) Rules 2006, a reimbursement of expenses shall be liable to be taxed unless the same is incurred by the service provider as a "pure agent" of the service receiver. .
As per Rule 5 of the Rules, the gross amount charged shall include the cost and expenditure incurred in connection with the taxable services charged to the service receiver. .
No deduction is allowed on the reimbursement of expenses unless, once again, these expenses are incurred by the service provider as a pure agent of the service receiver..
“Pure agent” has been defined in Explanation (1) to Rule 5 (2) of Service Tax (Determination of Value) Rules, 2006. .
Please note: The levy of service tax on reimbursements had been challenged in Intercontinental Conslt & Technocrats (P) Ltd v. UOI (2008 (12) STR 689 (Del), and the matter is pending adjudication
27 April 2012
Gorthi,
You've 2 options:
1) Follow the suggestion given by the two experts. OR
2) Ask the lawyer to submit 2 separate bills for services rendered & reimbursements in the nature of out of pocket expenses.
Here, you got to deduct TDS ONLY on the services i.e. on 1L
We follow the second option & our service providers have never put in their 2 cents.
You've 2 options:
1) Follow the suggestion given by the two experts. OR
2) Ask the lawyer to submit 2 separate bills for services rendered & reimbursements in the nature of out of pocket expenses.
Here, you got to deduct TDS ONLY on the services i.e. on 1L
We follow the second option & our service providers have never put in their 2 cents.
01 May 2012
If the OPE expenses are given by way of a separate bill, then it is not subjected to TDS else TDS has to be deducted.
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