Service Tax on Reimbursement of Expenses

This query is : Resolved

NIKHIL (Querist)
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12 February 2011 We are consulting engineers and our engineers are visit to client's office for discussion. While billing for the travelling expenses incurred by our engineers, can we charge service tax by the client. Please Help me.

NIKHIL

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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12 February 2011 DEAR SIR,

FOR INSTANCE, A contracts with B, an architect for building a house. During the course of providing the taxable service, B incurs expenses such as telephone charges, air travel tickets, hotel accommodation, etc., to enable him to effectively perform the provision of services to A. In such a case, in whatever form B recovers such expenditure from A, whether as a separately itemised expense or as part of an inclusive overall fee, service tax is payable on the total amount charged by B. Value of the taxable service for charging service tax is what A pays to B.

FOR MORE INFO:-
Notification No.12/2006-Service Tax DTD. 19.04.2006

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