Reimbursement of Expense

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sayeed (Querist)
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03 June 2010 Friends,

Company B is clearing goods on behalf of Compnay A from the third party C. Compnay B pays to the C which includes the service tax and the compnay B is reimbursing the same from compny A which is amount paid to Compnay C - st thereon + service charges of 10% + service tax. Is proceddure adopted by b is correct . or else what is correct treatment,

pls clarify immedaitely.

Madhukar N Hiregange

Madhukar N Hiregange (Expert)
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07 June 2010 Chargiung of ST on reimbursement could be excluded under REule 5 (2) of the ST valuation rules.

Otherwise the commercial agreement plays the riole. In your case B would have aviled the credit of ST paid by service provider and would be paying the ST only on the 10% service charges which maybe important.

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