Reim of Expenses from Client

This query is : Resolved

Ravi Kiran (Querist)
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21 May 2008 Dear Sir,

I have the following Queries

1) Suppose a Indian company (Trading Company only Commission Income from the Foreign Customers on account of Sale of there machine in India) Incurred Expenses on behalf of there Foreign Customers who has come for marketing the product in india and The Indian Company is acting as agent of the Foreign Company in india ( Expenses Like Air Tickets,Hotel Charges Car Hire Charges etc)
Expenses bills are raised on the Indian Company
What accounting entry should be passed in the books of Account of Indian Company.

2)Suppose the above mentioned Indian Company raise a Debit Note the Same Expenses Incurred above what accounting entries should be passed in the books of Indian Company

3) In Case of the above transaction is there Tax Implication applicable (FBT,IT and Service Tax)

Regards

Ravi Konda

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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21 May 2008 Is the expenditure is recoverable?

Ravi Kiran

Ravi Kiran (Querist)
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21 May 2008 Sir,

We are raising a debit note for recovering the same

Regards

Ravi Konda

shanti prakash

shanti prakash (Expert)
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21 May 2008 Entries in respect of transaction related to sale of machine will be done by indian concern as Bank Account/Party Account debit and foreign concern credit.
With respect to commission ,the Indian concern will be entitled to commission as their income and accounting entry would be foreign co account debit and commission account credit.thereafter it will be transferred to P&L A/C.
Now the taxability aspect of reimbursement of expenses will be that it will not be chargeable to tax in the hands of indian concern as no profit element is involved in that.
any further information if you wanna you can ask me.

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