Buying laptops and car on behalf of overseas client

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An Indian business owner is seeking advice on purchasing laptops and a car on behalf of their US-based clients. They want to know the tax implications, specifically if they'll be taxed on the full amount or just the depreciated value, and how to best account for these purchases. The discussion explores options like invoicing for reimbursement versus capitalising the assets and claiming depreciation.

RITESH KUMAR

RITESH KUMAR (Querist)

30 May 2022 Hello I run a small business in India. All my clients are in United States. Since they outsource work to me, I have to buy laptops on their behalf. Now these laptops are not assets for me Or my company in India. Given a scenario where they paid me 10 lakhs to buy laptops I know only 40% that is 4 lakhs will be written as depreciation and rest on 6 lakhs will I have to pay 25%(pvt Ltd company) tax on it?

Someone suggested to invoice client for laptop invoice amount and show it as reimbursement.

What is the best way to go about it, and can I do the same for car as well? Claim it as reimbursement and not as an asset.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

30 May 2022 Whose name laptop purchased and in whose name car registered.

RITESH KUMAR

RITESH KUMAR (Querist)

30 May 2022 Since my client does not have presence in India, every thing has been purchased in the name of my company.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

30 May 2022 So capitalise the purchase and claim depreciation in your books.
Keep 10 lacs under advance. Adjust progressively while billing to the clients to the extent of depreciation claimed.

RITESH KUMAR

RITESH KUMAR (Querist)

30 May 2022 This seems like good logical answer, Thanks.

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