In case of Exports and Imports We appointed a CHA, CHA is invoicing us 2 invoices one is Reimbursement Invoice and Another is Service Invoice. In Reimburcement invoice it is not charging service tax, but for the reimbursement invoice we are getting the supportings from the 3rd party in our name where the 3rd party is charging service Tax, and we are claiming that service Tax also. Now while making payment to CHA for those reimbursement charges shall we deduct TDS.
Now I will explain with Example. CHA is raising 2 invoices One is Reimbursement and another is service Invoice,
So noew how i am passing the entries for Reimbursement Invoice
Freight on Import Dr.
Service Tax Dr.
To 3rd Party Cr.
than
3rd Party Dr.
To CHA Cr.
than
CHA Dr.
To Bank A/c Cr.
and for service Invoice
Freight Doc. Charges Dr.
Service Tax Dr.
To CHA Cr.
Than
CHA A/c Dr.
To Bank A/c Cr.
To TDS A/c Cr.
In case of Reimbursement invoice i am not deducting TDS because we are not paying directly to 3rd party, we are paying to CHA through Reimbursement Bill.
Please clarify, What is correct whether we need to deduct TDS on the amount paid to 3rd party through Reimbursemnt bill because we are taking service Tax credit on 3rd party invoice
or No need to deduct TDS because we are not directly making payment to 3rd party and we are paying through Reimbursement invoice to our CHA.
For your information our CHA is neither taking Service Tax Credit on 3rd Party invoice nor he is deducting TDS on it.
and if TDS need to be deducted it is whose responsibility to deduct TDS.....?
15 June 2013
1)Yes.C& F agents will not claim sericetax on re-imbusement expences as re-imbursement expences will not form part of "gross amount charged". if they do so..it will lead to double taxation.
2) CENVAT credit:- you can take the cenvat credit on re-imbursment bills provided by c&f agent.
In case the reimbursement of expenses is claimed then care should be taken that CENVAT credit in respect of tax or duty included in the claims for reimbursement should be claimed only by the service receiver because expenses are incurred on his behalf and the agent (service provider) should not claim CENVAT credit for the same if the service provider claims such CENVAT credit then principal of agency will be failed.
CAclubindia
