SAC for reimbursement of travelling expenes with markup ??

This query is : Resolved

FinTax (CA ABHISHEK SINGH) (Querist)
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17 July 2024 Hello Everyone,

An Indian company is providing IT related services to its foreign holding company. For normal services company raises invoice on cost+ basis ( lets say 10%). SAC - 998313

During the year Many employess went to germany for training and development purpose. Invoice raised for total cost incurred+10%

What should be the SAC for this invoice ? will it be same 998313 or different ??

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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13 August 2025 Key points:
The normal IT services you provide to the foreign holding company are under SAC 998313 (IT services).
Now, when you reimburse travel expenses (like employee travel for training), and add a markup (e.g., 10%) on these costs, the nature of the supply changes.
SAC for Reimbursement with Markup:
Reimbursements with markup are treated as a supply of service, not just a pure reimbursement.
According to GST guidelines, if expenses are reimbursed with markup, the entire amount (cost + markup) is considered a composite supply or a separate service.
The SAC to be used is generally the SAC related to business support services or management consultancy if the expenses relate to those.
Practical approach:
Since your main service is IT-related under SAC 998313, and the travel expenses are part of the service delivery, you can:
Use SAC 998313 for the entire invoice including cost + markup, if travel expenses are integral to providing IT services.
OR, if travel is separately invoiced, then for the markup part on travel expenses, use SAC 998599 (Other Support Services), which covers miscellaneous support services.
What do the GST FAQs say?
GST FAQs clarify that if expenses are reimbursed without markup, they are not treated as supply, so no GST.
If reimbursed with markup, entire amount is treated as supply and taxable.
Summary table:
Scenario SAC to Use Notes
IT services invoice (cost + markup) 998313 Use when travel is part of IT services
Separate travel expenses reimbursement with markup 998599 Use if travel is invoiced separately with markup
Reimbursement without markup No SAC applicable Treated as mere reimbursement, no GST
Final suggestion:
Since your invoice is for total cost incurred plus 10% markup, and travel is part of IT service delivery, it’s reasonable to use SAC 998313 for the entire invoice.

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