Re-imbursement

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Ajit Hegde (Querist)

06 January 2014 As per my knowledge payment received by the client as re-imbursement of expenses (like statutory fees to departmts) are billed without charging service tax on the assumption that such statutory is inclusive of service tax. But when u know the such payments are not inclusive of service tax in some cases, still can we bill it without charging s.tax.? please advise if my assumption is not correct.

Suresh Ramaswamy

Suresh Ramaswamy (Expert)

06 January 2014 Whenever a professional bills a client for services rendered, there may be out of pocket expenses which were incurred in discharge of the contract. If the Out of Pocket is included in the same bill, then subject to presentation of evidence, no ST is leviable on Out of Pocket Expenses, e.g. payment of tax challans, printing and stationery supported by bills, train, pairfare, bus fare supported by proper documents, etc. In cerrtain other cases like local conveyance, refreshments, etc. without proper invoices, ST is leviable on these expenses also.

To avoid all hassles, the Out of Pocket Expenses should be shown in a separate bill as Reimbursement of Expenses. In such a case no ST will be leviable.

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